selling house for first time/deposit query

Mikey007_2

hi
we are selling our house for the first time.

it was a new build.

we originally bought it for £170,000 4 years ago, its now been valued @ £235,000

I have £142,000 left to pay on the current mortgage.
Are we looking at £65,000 deposit/equity? or do we also include the amount we have paid off? we originally borrowed £150,000

cheers

MissMotivation

The equity in a property is the amount that it sells for minus the amount of outstanding mortgage.

For example.........House sells at £200,000 with outstanding mortgage of £150,000 therefore the equity would be £50,000.

When working out your figures, always remember to take into consideration the fees for selling/purchasing and also stamp duty on your next property, especially if purchasing above the £250,000 threshold.

Bossyboots

Your deposit on your next purchase will be 10% of the purchase price. Many transactions nowadays allow the actual deposit paid on exchange to be 5% but if you then fail to complete the balance of the 10% would be payable.

Unless you come to an arrangement for the deposit from the bottom of the chain to be passed up the chain, you will have to find the cash to pay your deposit at the time of exchange on your new property.

Mikey007_2

ok so i would have say £90K equity.
say the house i want is 350,000 and they want 10% deposit thats £35,000
stamp duty would be another £10,500. Thats half the hequity gone.

Is it possibe to "bag" some of the remaining equity for house improvemtns / pay of car loan etc? Who would that be arranged with?

Bossyboots

I am not sure whether I am misunderstanding what you mean or if you do not understand how the process works.

The "equity" is not a tangible sum unless you are going to sell your own house, bag the money and then buy somewhere else. On the figures you have provided, you are already in the region of £130,000 short on balance of purchase price and all the costs associated with buying and selling. To liquidate any of the current equity you would need to borrow that sum on top of the shortfall in order to have sufficient to buy your new property.

In summary, the only way to achieve a cash payment at the end of both transactions is to borrow more than is required to complete the purchase so that you have a cash sum left over at the end but of couse, you will be paying interest on that.

If you are proposing something that I haven't caught onto yet, perhaps you could explain what your intentions are and how much cash you actually have to play with.

Fitzy29

Fortget how much you paid for the house, that now has no relevence. Your equity is the sale price less the redemption figure on your current mortgage.

Call your mortgage company and ask them to send you a redemption statement. I as you say the figure is 142,000 and you manage to sell for 235,000 that will leave you 93,000 cash. Now deduct the cost of the sale...legals and estate agents fee's .

Take this net balance of say 88,000 this is then your deposit for your new house, remeber to allow some of it for legal fees and stamp duty.for the new place say 2% of the new purchase price.:T