Deposit?

SootSoot

When selling and buying, do you HAVE to use all the equity from your sale for the purchase on your new house and top up with mortgage (if needs be), or can you keep some of it to buy things/pay off debts?
e.g I sell house for £200k get £20k equity buy at £250k but want to keep £5k for furniture.

Thanx

peggydoodaa

It's your choice if you want to keep some money back as long as you have enough deposit to put towards your new house.

I'll be paying off most debt and keeping £10k back for other stuff too. But then i've still got a decent deposit for the new house.

DeepSporran

As peggydoodaa says, you can keep back some money - but remember that this may make a difference to what your new mortgage will cost you.

Obviously if you borrow more, the monthly payment will be bigger.

However (and more importantly) you're more likely to find an attractive mortgage interest rate if you don't have a high loan-to-value ratio (LTV). In your example, your LTV will be 94%. The best mortgage deals are only available if your LTV is 90% or less.

Mind you, with your example, even if you kept back the £5K, your LTV would only come down to 92% so in this case it might not make a difference.