Stupid mortgage question !!!! If you own a house, you can answer my question!!!

[BrianMcFadden]

I am very confused (baby brain), please put me straight.
Say I get approved for a 250k mortgage, then i find a house for 220k, can i use the remaining 30 for alterations and/or furniture?
Or will the bank only lend the purchase cost of the house?

Thank you.

Bank will only lend the purchase cost. Or a proportion of it. They want to get it back by selling the house if you don't keep up your repayments, see.

it used to be possible to get over 100% mortgages - but in the current climate I think you would struggle - in any case to use money you are payingn for over 25 years for furniture would be a bit mad!

no you can't easily. The mortgage is based upon the perceived value of the property(which may differ to the price you offer) as security for the loan. If you defaulted they would n't be able to repossess and recoup the total amount by selling. The days of 100% + mortgages are numbered as they are too risky in the current economic climate.

Thought so
Thanks all.

do you have equity in the one you are selling? if so could you keep back 30k then take the 250k?

If the house you are buying needs loads of work then the lender will sometimes get the valuer to do 2 valuations, one in it's current state and one when improved. They will then release funds for you to purchase the property and then retain the remainder of the funds until you have completed the works. Of course this means that you have to have the cash available to carry out the work in the first place!