Can you use equity for house moving costs?

NewbieHouse

Hello, I’m new here and so sorry if this has been asked a million times before but I’m struggling to find this information online. 

I bought my house 5 years ago for £77k (Yorkshire based) with an £7.7k deposit and it now has about £25-30k equity in it. Since then I have got married and we want to expand our family and space; we’d be looking at houses that are about £170-200k.

My question is, after we’ve used the equity to pay off the deposit for our next house, can we then ask to have the remainder of the equity to pay off moving fees like solicitors, surveys, moving costs etc? 

Thanks in advance

grumbler

I don't see why not. It's your money and you don't have to spend it all on a new house. However, for "solicitors, surveys" etc. you will possibly have to pay before your old house is sold.

Mutton_Geoff

NewbieHouse said:

Hello, I’m new here and so sorry if this has been asked a million times before but I’m struggling to find this information online. 

I bought my house 5 years ago for £77k (Yorkshire based) with an £7.7k deposit and it now has about £25-30k equity in it. Since then I have got married and we want to expand our family and space; we’d be looking at houses that are about £170-200k.

My question is, after we’ve used the equity to pay off the deposit for our next house, can we then ask to have the remainder of the equity to pay off moving fees like solicitors, surveys, moving costs etc? 

Thanks in advance

The money that is left over from your sale isn't labelled in any way. You should just look at cost to change, ie (picking middle figures)

Sale price £100k
Less mortgage £67k
Less agents fees £1k
Less legal fees/disbursements £1k

Proceeds to bank : £31k (this is your money)

New purchase £185k
SDLT £0
Survey £1k
Moving Costs £2k
Legal fees/disbursements £1k
Furniture/appliances needed £5k

Total cost : £194k

Funded by :
Proceeds of sale £31k
Money found down back of sofa/savings accounts £3k
Balance to mortgage £160k

Treat the whole thing as two separate sums as above. Edit with your own figures.

saajan_12

In theory yes - you can get a larger mortgage on the new property than the one you're paying off on the old one, subject to how much the lender will lend you. 

In practice, the timing of these costs may not line up with when you get the payout. 
- the equity would be paid out upon completion of your sale.
- movers, initial solicitor fees, survey fees, mortgage broker fees may want paying partially upfront, before that date
- stamp duty, and the rest of some of the fees above may be payable upon / after completion

Generally not a good idea to take a short term loan for those, so you'd need to do some cash flow planning. 

NewbieHouse

Thank you all for your advice, that all makes so much more sense now - especially with thinking about the timings of when these things will need to be paid. Appreciate it as I’ve never had experience of moving house before! 

Petriix

Obviously it might make things easier if you have a trusted relative who would lend you the money for advanced costs who you could pay back on completion. However, as things can (and do) go wrong with house sales/purchases, do have a backup plan.