Releasing equity whilst part exchanging

NewBuildNewbie

Hi,

We want to move house and have done for a couple of years. We’ve finally seen a house we love, it’s a new build and they’ll offer part exchange. We have equity in the house but limited cash other than covering stamp duty/searches/legal fees/moving costs etc.

I know that will trigger concerns about new house affordability but we both have good salary’s and it’s is affordable, just I’ve gone back to work after maternity so we used a good chunk of our savings to support that and we haven’t built them back up yet but don’t want to miss our dream house plot. 

With a new build which we have to pay cash for any upgrades. I’m going to keep these to a minimum and just do things ourselves bit by but. But there’s somethings like wired in alarm, outdoor taps, exterior lights, heated shower rails etc that can’t be easily or cheaply added after so we would definitely want put in during the build if possible. 

My question is - does all the equity need to go in to the next house, or can I take some out to cover those costs ? So if we have £75,000 equity from the sale, could I use £5,000 towards upgrades and put £70,000 down for the next house deposit provided the new mortgage would cover that gap? 

How does it practically work, when we sell our house as part ex, the money goes to the solicitor who clears our current mortgage I presume… is the extra equity transferred to us or straight as the deposit on the new build? 

Sorry just confused, this is our first time buying with a property to sell as well

Flugelhorn

no not all the equity needs to go into the next house, provided you can borrow enough for the new one

say the new house was 300 K and your current one is 200K - you may have a mortgage of 125K left.

For the new house you may see if you can borrow say 230K and then when the sale goes through 5K will be returned to you by the solictor 

The only thing to check is when they are wanting payment for the extras

dimbo61

You could also consider an offset mortgage and put say 25% deposit down and the extra equity you have could be kept on the offset account till needed.
Great way to build up savings 

bluelad1927

Will the builder want the money upfront for these upgrades? I expect they will as upgrades can run into tens of thousands.

If so then the problem will be that the money you hope to retain won't be available to you until completion