Re-install OS X and restore data from Time Machine on iMac

I have a mid-2010 iMac with 500 GB internal hard drive and OS X 10.10.3. I also use an external 1T hard drive for additional storage. Total usage of both these drives is 800G. I have another external 2T hard drive that I use for Time Machine. I want to replace the 500G internal drive with a 1T internal drive. The new hard drive will be replaced by a local computer store (MicroCenter) and I intend on re-installing OS X and then restoring all the applications and data from the Time Machine backup from both the 500G internal and 1T external to the new 1T internal.

Please advise on the best way to do this.