Difference between mortgage offer and actual equity

[Sundayschild4]

Hope I can explain this properly - boring question but we are close to exchanging contracts and have a mortgage agreed based on borrowing £290k out of £360k house so £70k equity deposit.
Had our final balance from current mortgage company today and we will actually have more like £73k equity. What happens to that extra 3k? Do we get it as cash in the bank or is it taken off the amount we are borrowing? Thinking it would be useful to have for decorating but dont know whether to use it to knock mortgage down a little. Can you choose what to do with it? Thanks!

Surely it’s your money, you choose what you want to do with it?

Yes you get it back. Presume you don’t need it for legal fees or stamp duty though?

We've never sold a house before so don't know what the process is will have to ask solicitor tomorrow. Already have stamp duty and legal fees and some decorating money saved so sensible thing to do is probably knock the mortgage down a little?

I would understand you sell house pay outstanding mortgage anything left over from sale 73k is yours to do as you want. If purchasing new home use 70k deposit keep rest.
However I am now familiar with all the different mortgage products bank provides.

The solicitor will probably take any outstanding amounts from that sum (check if the solicitor will pay the EA if you used one or if you need to do that separately) and then the rest is yours.

If you change your mortgage amount, it will take a while for the new paperwork to be issued so if you are close to exchange or completion, ask your solicitor if it is possible. Good luck with the sale, OP.

Brilliant thanks all. Yes hoping it all goes through now it's been a long long wait!

Rather than trying to renegotiate mortgage it might be easier to take the money and then overpay on your new mortgage. We were able to overpay by up to 10% a year, so you could take the 3k and then put it straight into the mortgage as an overpayment which would save renegotiating the paperwork if you are close to completion. Do check your loan restrictions. We can only overpay 10% a year. Alternatively if the 3k will be your only savings you might be better off putting it away just in case.

Yeah very good point didn't think about the hassle of changing the mortgage now. Will keep it to the side in case anything we havent thought of goes wrong but then overpayment is something I definitely want to start doing!