Freeing up capital when selling and buying

Southend_2

Apologies in advance if this is a silly question!

A bit of context first... I bought my current home in 2011 as a FTB and now looking to move home in the coming months. So never done a sale and purchase concurrently. Current house worth approx £310k, outstanding mortgage of £50k ish. Our budget for the new house is approx £450-475k. 

What I'm trying to get my head around is whether it's possible to free up some of the equity in my current property as part of the sale and purchase so that we can pay the estate agent fees,  stamp duty and have a bit of cash for new furniture etc.

Am I right in thinking that the way this would work is essentially that the sale proceeds from my house plus the new mortgage goes to the conveyancer and they would then pay out (to me) whatever is left once the new house is paid for and they have taken their fees etc? Also, can the conveyancing solicitor sort out the stamp duty payment from the equity or do we need to extract it from them as cash and pay it ourselves? 

Thanks in advance for any answers/advice. 

eddddy

Southend_2 said:

Am I right in thinking that the way this would work is essentially that the sale proceeds from my house plus the new mortgage goes to the conveyancer and they would then pay out (to me) whatever is left once the new house is paid for and they have taken their fees etc? Also, can the conveyancing solicitor sort out the stamp duty payment from the equity or do we need to extract it from them as cash and pay it ourselves? 
 

Yep - you are right. All the fees and the stamp duty can be taken out of the sales proceeds (equity) from your current house.

Obviously, you'll need to do your sums to make sure there's enough money to cover your purchase and all the other costs.

If you aren't putting any savings in, it sounds like you're looking at a new mortgage of up to around £250k.

Southend_2

eddddy said:

Southend_2 said:

Am I right in thinking that the way this would work is essentially that the sale proceeds from my house plus the new mortgage goes to the conveyancer and they would then pay out (to me) whatever is left once the new house is paid for and they have taken their fees etc? Also, can the conveyancing solicitor sort out the stamp duty payment from the equity or do we need to extract it from them as cash and pay it ourselves? 
 

Yep - you are right. All the fees and the stamp duty can be taken out of the sales proceeds (equity) from your current house.

Obviously, you'll need to do your sums to make sure there's enough money to cover your purchase and all the other costs.

If you aren't putting any savings in, it sounds like you're looking at a new mortgage of up to around £250k.

Thanks. Yes that sounds about right with the mortgage, we were thinking it would likely be £220-240k depending on exactly how much the current house sells for and what we end up paying for the new house. I'm working slightly  conservatively on approx £310k selling price for budgeting purposes but recent sales nearby were around £320k and a neighbours house is currently on the market for offers over £350k (probably rather optimistically).

Southend_2

So just as a ballpark, does the following sound feasible as a budget?

Sale of current house + £310k
Pay off existing mortgage -£50k 
Fees, stamp duty, searches etc -£15k
Release equity from sale proceeds to buy stuff for new house -£10k
Subtotal = +£235k

New mortgage +£240k

Budget for new property = £475k

lisyloo

Looks ok to me. £10K release is pretty small in the scheme of things, provided of course you can afford it - but I think we can leave that to the mortgage provider to assess.

eddddy

I'd say your costs look a bit tight. Have you priced in the estate agent's fee, mortgage application fees, surveys, removal company costs?

Presumably, you have no 'early repayment charges' on your current mortgage.

Also, if you end up aborting a purchase (or sale), that will add to your costs.

Southend_2

eddddy said:

I'd say your costs look a bit tight. Have you priced in the estate agent's fee, mortgage application fees, surveys, removal company costs?

Presumably, you have no 'early repayment charges' on your current mortgage.

Also, if you end up aborting a purchase (or sale), that will add to your costs.

Thanks again for replying. We do have some cash as contingency in case of aborted purchases etc. but you're probably right on the costs.

No early repayment fees as my fixed rate recently ended.

Would you say the following is in the right ballpark for costs? 

£10k stamp duty 
£4k Estate agent selling fee
£1k mortgage application fee
£1k conveyancing
£1k survey 

We are planning to pay removal costs from savings. 

Is there anything obvious I've forgotten to list?

Southend_2

lisyloo said:

Looks ok to me. £10K release is pretty small in the scheme of things, provided of course you can afford it - but I think we can leave that to the mortgage provider to assess.

Thanks. We've done a couple of online affordability calculators and think we should be well within what they are prepared to lend. We plan to contact a broker soon so will be able to confirm affordability before proceeding further.

trix-a-belle

Southend_2 said:

eddddy said:

I'd say your costs look a bit tight. Have you priced in the estate agent's fee, mortgage application fees, surveys, removal company costs?

Presumably, you have no 'early repayment charges' on your current mortgage.

Also, if you end up aborting a purchase (or sale), that will add to your costs.

Thanks again for replying. We do have some cash as contingency in case of aborted purchases etc. but you're probably right on the costs.

No early repayment fees as my fixed rate recently ended.

Would you say the following is in the right ballpark for costs? 

£10k stamp duty 
£4k Estate agent selling fee
£1k mortgage application fee
£1k conveyancing
£1k survey 

We are planning to pay removal costs from savings. 

Is there anything obvious I've forgotten to list?

I bought & sold 5 years ago & my conveyancing quotes from 5 different firms were £2-2.6k to cover the sale & purchase elements of conveyancing so you certainly need to up that.

Southend_2

trix-a-belle said:

Southend_2 said:

eddddy said:

I'd say your costs look a bit tight. Have you priced in the estate agent's fee, mortgage application fees, surveys, removal company costs?

Presumably, you have no 'early repayment charges' on your current mortgage.

Also, if you end up aborting a purchase (or sale), that will add to your costs.

Thanks again for replying. We do have some cash as contingency in case of aborted purchases etc. but you're probably right on the costs.

No early repayment fees as my fixed rate recently ended.

Would you say the following is in the right ballpark for costs? 

£10k stamp duty 
£4k Estate agent selling fee
£1k mortgage application fee
£1k conveyancing
£1k survey 

We are planning to pay removal costs from savings. 

Is there anything obvious I've forgotten to list?

I bought & sold 5 years ago & my conveyancing quotes from 5 different firms were £2-2.6k to cover the sale & purchase elements of conveyancing so you certainly need to up that.

Thanks, I was going by the cost when I bought my current property as a FTB but it's obvious when you think about it that buying and selling simultaneously will cost more than that! Great to have input from others as I knew I would be making obvious mistakes somehow.