property selling for newbie

catoutthebag

Just bought a new place my first place so don't intend to sell yet.

I'm curious as to when the time comes to sell.

Say I paid 100k. 10k deposit. The equity built up was another 10k. So 20k total?
Then say I sold it for 110k.
The bank gives me 20k + (110-100) = 30k straight to my account (less any selling fees etc)?

Is this summation correct?

catoutthebag

Or is equity the remainder after interest payments? I have a normal mortgage not interest only.

macman

After you sell you get back the sale price minus what you owe the bank. You borrowed £90K so you get back £110K minus £90K=£20K (minus whatever mortgage capital you have paid off).
The equity is the sale value minus what you owe.

eddddy

catoutthebag wrote: »

Just bought a new place my first place so don't intend to sell yet.

I'm curious as to when the time comes to sell.

Say I paid 100k. 10k deposit. The equity built up was another 10k. So 20k total?
Then say I sold it for 110k.
The bank gives me 20k + (110-100) = 30k straight to my account (less any selling fees etc)?

Is this summation correct?

You're looking at things from a slightly unusual perspective. (The bank doesn't give you money when you sell, you give them money!) It may be easier to think in these terms:

- You own a house worth £100k
- You have a loan from the bank of £90k

Over time, the value of the house may increase (or decrease)

Over time, you will gradually be paying off the loan (and perhaps you will make some lump sum repayments as well, to reduce the loan)

When you sell, you must repay what's left of the loan to the bank.


So perhaps in a year's time...

- You sell the house for £110k
- You still owe the bank, say, £89k - so you have to pay that back

So you will have £21k left (to put towards the deposit of your next house, spend on a holiday or whatever).

catoutthebag

Sorry I don't really understand your last bit.

Say I sold the house and move into a rented flat. And I've made 21k in your example I still have to pay 89k to the bank even though I'm not living there or bought another house? So I'd be paying rent in a new place and a mortgage? !

xnikkix

The 89k mortgage is paid off by the proceeds of the sale and the 21k is the money left over.

110k sale price - 89k paid to bank = 21k you receive in cash.

eddddy

catoutthebag wrote: »

Sorry I don't really understand your last bit.

Say I sold the house and move into a rented flat. And I've made 21k in your example I still have to pay 89k to the bank even though I'm not living there or bought another house? So I'd be paying rent in a new place and a mortgage? !

No.

You sell your house for £110k (so you potentially have £110k in your pocket)

But you still owe the bank £89k

So you give them £89k you owe them (and the loan is now paid off)

So you have £21k left over (and you don't owe the bank anything more - you have no mortgage, no more monthly repayments).