Downsizing home to help purchase workplace

naff

Hello,

I'm in a position to buy my workplace (a freehold, stand alone repair-workshop), which I'd like to do but I need to borrow around £45k to do so. I've also realised I want to move into a smaller, cheaper home and I'm hoping to use this to help purchase my workplace but I'm struggling to get my head around it.

In simple terms, without fees, timing and such. Current house is worth £225k, remaining mortgage is £75k, so £150k in equity. If I simply move into a house of £150k, no mortgage, hurrah, but I wish to purchase my workplace needing the £45k, so I want to release £45k of equity in my old house to buy the work premises so to then hopefully end up with the new house worth £150k with a remaining £45k mortgage and my workplace purchased.

Is this a thing? – it sort of make sense to me, but then also sounds really messy.

Is there a clearer way of explaining it with correct terminology?

Will a lender also be willing to do that? – guess a mortgage going from £75k to £45k is better than it going to zero but I know some may not want to do it if I'm using the money for business and also a mortgage of only £45k may not be of interest to a lender

I could maybe find the £45k elsewhere but I don't think it'll be simple or have interest rates near a mortgage.

Any help getting my head around the above would be greatly appreciated.

Many thanks

DullGreyGuy

The mortgage is for buying a property not for a business. The reason you want a mortgage rather be a cash buyer is for your business but thats a separate matter. 

They will need to factor in the running costs of the workshop in the affordability calculations. 

amnblog

When you sell you pay off your current £75,000 mortgage. Your Solicitor then receives, £150,000 cash from your equity.

When you buy your new home, you decide how much of the cash you wish to put in  and how much you wish to borrow.

You may buy at £150,000, putting in £105,000 cash and borrowing £45,000.

Your solicitor has therefore put £105,000 or your £150,000 cash into the new purchase, they are then holding the remaining £45,000 of your cash which you can use for whatever legal purpose you wish. In this case, buying the workshop.

ACG

You just want to port your current mortgage over to a new property. 
Once that is done you will have around £75k in the bank from the equity. 

That can then be used to purchase the building. 

Its probably more complicated trying to explain it than it is to do it haha. If your struggling, speak to a broker but assuming the income is there, it should be fine. 

naff

Good stuff - thank you for your help.