How to move in Scotland??

[luvenders]

I'm sorry if this is completely obvious but I really don't understand the money side of how to go about buying a new home.

We bought our flat fixed price (live in Scotland) using an inheritance on top of savings as a deposit. We now have a child and will both be working from home for the foreseeable and our tiny flat is just way too tiny, but we don't have a lot of money in savings.

This is what I don't understand: say we wanted to buy a house for 250,000. If offers over are as high as 20% that would mean we'd need an additional 50,000. I remember when we bought our flat we went for fixed price because the offers over couldn't be included in the mortgage. So if we move do we need to have that money in cash again? Or could we look to increase our mortgage and use the money from selling the flat / the money we used for the deposit to pay the offers over? How would that work in terms of timings?

If we had to save up 20% I'm not sure how many years it would take for us to afford to move somewhere with more space...

I bought my first house “offers over” and offered £1k over the asking price. They said yes. My current house was offers over X amount, I looked at the home report and offered that, which was around 5k more than the price on the tag, if you know what I mean. It’s not like paying a tip at a restaurant. You could offer £1 over and they can take it or leave it.

And yes, you’ll only get a mortgage for the home report value, but typically they will ask for a few thousand below the home report to generate interest.

And finally you’d use the money from the flat (presumably you’re not in negative equity) deduct it from the price you agree with the seller and then use the bank for the remaining mortgage.
Example- buy house for £250000. Sell flat for £100k, but you only owe £80k, therefore you have £20k “credit”. You ask the bank for a £230k mortgage and use the £20k as your “cash”, if you see what I mean. If you offer over the home report then it would need to come from cash (savings, equity from previous sale or whatever) as you will not get mortgage for more than what the house is worth.

Speak to your mortgage lender and find out the max figure they’d be prepared to lend you - usually a multiple of salary. Then add whatever cash deposit you can afford, including any expected equity from your flat sale.
The final total will tell you what rough price range of houses you can view, allowing for the 20% extra for offers over.
Bear in mind that in some areas, such as Edinburgh, properties can go for more than 20% over. DD missed out on a £200K flat that went for £70K over asking price! She finally bought a £200K flat for £250K. It’s brutal out there.

Anything over home report you'll need to pay yourself. Which you might have from equity in your flat.
I think 20% over is quite a lot. I just bought a house valued at 300k and we went in at 327 so 10% over but I think we maybe could have got it less. We were desperate and just went straight in so high.

Yes, everything over the lender's valuation, you have to pay yourself. NB this may be different from the 'offers over' figure. So for example ours was on for offers over £240k but we had to pay 270 to secure it. The lenders then valued it at 250 though, so we had to find the extra 20k between their valuation, and our offer. So the money we paid outright was the 20% deposit on the 240, PLUS 20k to make up the shortfall.

In my view it's a bonkers system

Just because the advert says "offers over" doesn't mean you have to offer over. It can say offers over £300k and you could offer £280k if you like. You can offer whatever you want. Depends what area of Scotland you're buying for what the market is doing. For example I believe Glasgow market is buoyant so you can usually expect to pay over the home report value.

It's not the offers over price that's important, the seller sets that. It's the home report value. This is what your mortgage lender uses. Your mortgage lender will only lend you e.g. 90% of the home report value (if you get a 90% LTV (loan to value) mortgage). You need to come up with the deposit (the additional 10%) plus anything you want to offer over the home report value. If you have equity from your home you're selling this is "cash".

In the Central belt you are very unlikely to get a property for a price under the Home report value

I live on one of the Scottish Islands, not normally very in-demand property wise but houses currently routinely going for 10-20% over the 'offers over' and valuation. Market is crazy ATM.