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    • NineDeuce
    • By NineDeuce 8th Jan 18, 9:24 AM
    • 692Posts
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    NineDeuce
    Using equity to move house
    • #1
    • 8th Jan 18, 9:24 AM
    Using equity to move house 8th Jan 18 at 9:24 AM
    I would like to sell my flat and move to a house. I have some savings but think I will fall short of the total costs of moving house that I will estimate to be in the range of £5-6k taking into account potential stamp duty amounts.

    Is it recommended to therefore use the equity that I may gain from sale of my property to make up the short fall? I might be able to make this up in savings within a year but then I appreciate that house prices may go up and I would end up paying more this way.

    Thanks.
Page 1
    • hazyjo
    • By hazyjo 8th Jan 18, 9:32 AM
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    hazyjo
    • #2
    • 8th Jan 18, 9:32 AM
    • #2
    • 8th Jan 18, 9:32 AM
    What were you planning to do with the equity? Bank it? Invest it? Most people use the equity as you're usually talking tens/hundreds of thousands if upsizing.


    Wouldn't say 'recommended' is really the right word, it's more expected.


    Don't forget other moving costs. Impossible to estimate without knowing how much you're selling/buying for. Moving has just cost me around £20k.
    2018 wins:
    • NineDeuce
    • By NineDeuce 8th Jan 18, 9:56 AM
    • 692 Posts
    • 604 Thanks
    NineDeuce
    • #3
    • 8th Jan 18, 9:56 AM
    • #3
    • 8th Jan 18, 9:56 AM
    What were you planning to do with the equity? Bank it? Invest it? Most people use the equity as you're usually talking tens/hundreds of thousands if upsizing.


    Wouldn't say 'recommended' is really the right word, it's more expected.


    Don't forget other moving costs. Impossible to estimate without knowing how much you're selling/buying for. Moving has just cost me around £20k.
    Originally posted by hazyjo
    I want to use the equity as a deposit while taking out a bigger mortgage. I am guessing my property will be valued at around £150k where as I am looking at a house valued at around £200,000. A £200k property purchase would incur £1.5k stamp duty.

    What has cost you £20k?
    • eddddy
    • By eddddy 8th Jan 18, 10:11 AM
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    eddddy
    • #4
    • 8th Jan 18, 10:11 AM
    • #4
    • 8th Jan 18, 10:11 AM
    I want to use the equity as a deposit while taking out a bigger mortgage. I am guessing my property will be valued at around £150k where as I am looking at a house valued at around £200,000. A £200k property purchase would incur £1.5k stamp duty.

    What has cost you £20k?
    Originally posted by NineDeuce
    There are estate agent's fees, solicitor's fees, surveyor's fees, mortgage application fees, removal fees etc.

    If you're saying that you have no savings at all, that may be a bit risky. Sales/purchases can often fall through.

    You might run up a thousand pounds in fees - then lose it all because your buyer backs out, meaning you have to back out from your purchase.

    Also, a mortgage lender might be worried about you affording a larger mortgage, if you've been unable to save anything with your current mortgage.
    • kingstreet
    • By kingstreet 8th Jan 18, 10:26 AM
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    kingstreet
    • #5
    • 8th Jan 18, 10:26 AM
    • #5
    • 8th Jan 18, 10:26 AM
    Yes. It's completely normal to use savings and equity to cover your deposit and fees for moving.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • NineDeuce
    • By NineDeuce 8th Jan 18, 10:31 AM
    • 692 Posts
    • 604 Thanks
    NineDeuce
    • #6
    • 8th Jan 18, 10:31 AM
    • #6
    • 8th Jan 18, 10:31 AM
    There are estate agent's fees, solicitor's fees, surveyor's fees, mortgage application fees, removal fees etc.

    If you're saying that you have no savings at all, that may be a bit risky. Sales/purchases can often fall through.

    You might run up a thousand pounds in fees - then lose it all because your buyer backs out, meaning you have to back out from your purchase.

    Also, a mortgage lender might be worried about you affording a larger mortgage, if you've been unable to save anything with your current mortgage.
    Originally posted by eddddy
    I have been able to make some savings although I am probably about £2k short of where I want to be, so if I was to use equity, I would still have a good amount to secure a 10% deposit on a target house. It is just a matter of trying to get a deal done early to avoid house price rises.

    In my favour on the expenses side, I currently have to pay a service charge as I am in a leasehold property which will no longer be the case if I move. This is also another incentive for wanting to move now.
    • eddddy
    • By eddddy 8th Jan 18, 10:40 AM
    • 5,673 Posts
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    eddddy
    • #7
    • 8th Jan 18, 10:40 AM
    • #7
    • 8th Jan 18, 10:40 AM
    In my favour on the expenses side, I currently have to pay a service charge as I am in a leasehold property which will no longer be the case if I move. This is also another incentive for wanting to move now.
    Originally posted by NineDeuce
    A service charge covers the cost of repairs, maintenance, insurance etc for the building your flat is part of.

    If you buy a house, you will still have to pay for repairs, maintenance, insurance etc for the building. It could work out cheaper, but it might not.
    • NineDeuce
    • By NineDeuce 8th Jan 18, 12:12 PM
    • 692 Posts
    • 604 Thanks
    NineDeuce
    • #8
    • 8th Jan 18, 12:12 PM
    • #8
    • 8th Jan 18, 12:12 PM
    A service charge covers the cost of repairs, maintenance, insurance etc for the building your flat is part of.

    If you buy a house, you will still have to pay for repairs, maintenance, insurance etc for the building. It could work out cheaper, but it might not.
    Originally posted by eddddy
    That's a good point although the repairs covered under the service charge do not include anything inside the property. They only extend to the building and its communal areas. It does also include building insurance so I will have to think about a policy for that.
    • hazyjo
    • By hazyjo 8th Jan 18, 12:18 PM
    • 9,959 Posts
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    hazyjo
    • #9
    • 8th Jan 18, 12:18 PM
    • #9
    • 8th Jan 18, 12:18 PM
    What has cost you £20k?
    Originally posted by NineDeuce
    There are estate agent's fees, solicitor's fees, surveyor's fees, mortgage application fees, removal fees etc.
    Originally posted by eddddy
    What eddddy said. Mostly stamp duty and EA's fees. It soon adds up. (Mine was a pricier house which adds a lot more.)
    2018 wins:
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