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Stupid question time - equity
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withnail_wine
Posts: 18 Forumite
We're relatively new home owners - been in our first house for 3 years now.
We are looking to move and have been given all sorts of advice about what we need to do to purchase a new property. My question's quite simple, as I don't fully understand how equity works.
We bought our house for £117,000. We put a £10K deposit down, therefore the mortgage we took out was for £107,000. We believe we could sell the house now for around the same, if not a couple of grand more. Say we sell it for £120,000 and have paid off £3k of the mortgage... does that mean we have £16K in equity which could be used as a deposit for our next home?
We bank with Alliance and Leicester, if that has any bearing on anything...
We are looking to move and have been given all sorts of advice about what we need to do to purchase a new property. My question's quite simple, as I don't fully understand how equity works.
We bought our house for £117,000. We put a £10K deposit down, therefore the mortgage we took out was for £107,000. We believe we could sell the house now for around the same, if not a couple of grand more. Say we sell it for £120,000 and have paid off £3k of the mortgage... does that mean we have £16K in equity which could be used as a deposit for our next home?
We bank with Alliance and Leicester, if that has any bearing on anything...
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Comments
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you take away the amount you owe against the sale price the remaining is equity from that you will also need pay your estate agent fees and solicior fees0
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I'm not sure where you got the figure of £16,000 from?
If you have £107,000 outstanding on your mortgage and you sell for £120,000 then you will have £13,000 equity.
Don't forget to work out how much EA and sol's fees will be as you will need these on top of any deposit you need for your next property.My home is usually the House Buying, Renting and Selling Forum where I can be found trying to (sometimes unsucessfully) prove that not all Estate Agents are crooks. With 20 years experience of Sales/Lettings and having bought and sold many of my own properties I've usually got something to say
Ignore......check!0 -
withnail_wine wrote: »
We bought our house for £117,000. We put a £10K deposit down, therefore the mortgage we took out was for £107,000. We believe we could sell the house now for around the same, if not a couple of grand more. Say we sell it for £120,000 and have paid off £3k of the mortgage... does that mean we have £16K in equity which could be used as a deposit for our next home?
Yep, that's pretty much it. I'd budget £5k for Estate Agents, solicitors and moving costs myself. Plus Stamp Duty, depending on the price of your new house.Are the words 'I have a cunning plan' marching with ill-deserved confidence in the direction of this conversation? :cool:0 -
MissMotivation wrote: »I'm not sure where you got the figure of £16,000 from?
If you have £107,000 outstanding on your mortgage and you sell for £120,000 then you will have £13,000 equity.
Don't forget to work out how much EA and sol's fees will be as you will need these on top of any deposit you need for your next property.
I based the extra £3k on any amount paid off the mortgage. I.e. if I we had £104k left on the mortgage.
Stupid, convoluted example I gave, but you've answered my question, thanks 0 -
You may be able to work out how much you currently owe from your mortgage statements and if not you can ask your lender to let you know. Don't forget any redemption fees you may have to pay.0
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