Mortgage help!

[poppydog3]

I've seen a house I like and going to put a offer in for 220k, my house is worth around 200k and I have a mortgage of 125000 so will have equity of around 75k. The house I want to buy needs a bit of work doing, new windows kitchen bathroom ect. if I were to buy the house am I able to keep some of the equity I have from current house, so I'd keep 20k back to go towards work to the new house or do I have to put all the equity made down on to the new house and not be able to hold any back. I'm not sure how it works.

It depends on what you have been approved for by your mortgage co. It is based on your ability to pay. If you have 75k cash and your house is 220k and you have been approved for 200k mortgage then you just have to pay over the 20k. If you've only been approved for 150k then you'll have to pay over 70k.

You can use as much or as little as you like of any equity or savings you have.
In effect,

1. you sell your house and the buyer hands over £200000.
2. You give £125000 to the bank / building society (whoever you owe) to pay off that debt
3. You put £75000 in your pocket.

As a separate step, you then buy your new house, for which the vendors hypothetically accept £220000.
You can pay for that all in cash (if you had it)
or
Put down 10% or 15% deposit - whatever your lenders are prepared to lend on, so £22 000 or £33 000 and keep the rest to go on several exotic holidays if that's what you want to do. As long as your new lender is happy with the amount they are lending, against the value of the house.

However, it sounds like you have the process a bit topsy turvy.
Util you have sold your house (subject to contract), then the vendor isn't likely to accept an offer from you.

Thank you both for clearing it up. good to know I can keeo some back for repairs and means I can afford the house as wouldn't want to buy it if I didn't have some cash to do some of the basics.
@BackforGood where we live at the moment most people are finding houses before putting there's up, luckily the house we want to sell will should sell in a week tops.

luckily the house we want to sell will should sell in a week tops

A house has never sold in a week.

Sure, you might agree a sale and take it off the market within a week, but it can take several months to finalise the sale, exchange contracts, and get the funds.

A bank will not allow you to draw down your new mortgage to complete your new house purchase until you have the funds from your sale.

@VodselForDinner
I think it is obvious what I meant.

Yes you can keep some of the equity back, but you need to pass affordability and mortgages become cheaper the bigger deposit you put down as you will qualify for a lower interest rate, so worth considering if you're just above a LTV band.

It might be worth putting down a slightly larger deposit and waiting a short time to save for some of the work or even take a separate personal loan or other credit like interest free credit for a kitchen. Also don't forget about selling and buying costs.