Releasing cash from my house sale

A question about : Releasing cash from my house sale

Hi there,

Newbie here - we've just found our dream home and are trying to work out if we can afford to buy it and do it up.

We have a fixed rate mortgage that comes to an end in June. If we sell our house we should make 55k 'profit' from it. Including our original deposit we would therefore have 70k cash if we sold the house without buying another.

We'd like to put down 20% (50K) to buy our dream home. Which would effecitvely leave us with 20k 'spare' if we were able to secure a mortgage at the level we want. (This would be a increase in 45k on our current mortgage debt but we have both had payrises so are confident we should get this and we didnt take the max we could borrow last time)

What I want to find out is if we can keep some of the cash we make on our house sale if we don't actually have the 'cash' as we'd have to sort out a new mortgage deal as part of the sale process.

Can your mortgage provider force you to put down all the money you make as a deposit? Or do they allow you to release some of it in certain circumstances?

We would be looking to hold back around 20k to pay for stamp duty, legal fees and to have a cash pot for renovating the house (its a sound 1930s property but has not been touched for 40 years)

Am I living in cloud cuckoo land? Or are we in a strong position to negotiate this as we have made so much money on our current property?

What have other people's experiences been of this situation?

Thanks in advance!

Best answers:

• As long as the mortgage you took out for the house you live in now is repaid, that lender has absolutely no control over what you do with the rest of the sale proceeds.
  As for the new lender, you'll be applying for a completely new product and you can use as much or as little as you wish of your own money as a deposit, there's no 'forcing' involved anywhere!
  Your plan is fine, no need to worry (although a house that's not been touched for 40 years might need more spending on it than you think.)
• Ok thanks, I am now tying myself in knots re the original deposit we put down....so am I right in thinking that we would basically get that back if we sold at a profit?
  Our house was 175k we put down 15k deposit. We owe 155 ish on the house mortgage. So if we sold at 225 we would have 70k 'profit'?
• Equity is the word you are looking for - not profit.
  Yes, if you sold the house for 225k and owe 155k your equity would be 70k.
• The simple math is Value Ј225k - Mortgage Ј155k = Ј70K, yes.
  Don't forget your Estate agency fees which will be deducted before you get your equity back, and solicitors for selling/buying etc so there will be less than 70K actually due or returned to you.
• Of course you would receive the proceeds of the sale after commitments (mortgage, fees etc.) were paid out of it. Where else are you thinking it would go? Who else except you would possibly have any claim on that money? Then you can spend it on your new house as you please.
  Stop panicking! I think you just need to do a bit more research, really familiarise yourself with how mortgages and the buying/selling process works. The guides on here are a good starting point, I'm sure other posters will have suggestions of recommended reading too.
  Best of luck, it will be fine!