Using equity for moving costs?

Ceamonster

Having only been a house-buyer before, could someone explain the selling process to me?

I would like to sell my current flat and buy a house. Current mortgage on flat is £117K and I estimate its current value to be about £150K which if achieved through a sale gives me approximately £33K equity.

Is it possible to use some of this to pay the moving costs, ie. estate agent's fees, solicitor's fees, stamp duty on the new purchase, etc? How does it work? Does the mortgage company pay me the difference in equity or does it go to my solicitor and they pay fees etc using the money?

Also, if I put an offer on the house that I want, should I mention that the offer is conditional on me selling my flat?

Many thanks for your help.

Debt_Free_Chick

It goes to your solicitor.

Your solicitor will assume that any available equity will be paid to the seller of the house you're buying, as part of the purchase price. To keep things simple, let's say that all the equity is available and you're buying a house for £183k.

Your solicitor will assume that the equity of £33k will go to the seller and that you will also get a mortgage of £150k (so that the total paid adds up to the price of the house, which is £183k).

If you want e.g. £10k of that equity, you need to let your solicitor know. That will leave £23k to go to the seller of the house you're buying, so you'll then need to get a mortgage of £160k.

What your solicitor will want to see is your mortgage offer and the equity you want to transfer, which totals the purchase price you have agreed to pay.

Also, if I put an offer on the house that I want, should I mention that the offer is conditional on me selling my flat?

It's not necessary, no. This is the "default" position. Bear in mind that many sellers will not see you as a "priority" buyer, if you've not yet sold your own property. Until you sell, you are in no position to proceed with your offer.

HTH

Gillibobs

Myself and my partner are also in the same boat as you currently selling our flat and buying a house. We are now in a position close to exchange on both sale and purchase. We too had (and still have!) similar questions to yourself.

We spoke to our mortgage broker the other day regarding all monies from sale, paying off existing mortgage etc and as far as I can gather this is all something the solicitor sorts out and when they receive money from the sale they will utilise this to pay off existing mortgage and then will take all fees from the remainder. If you are buying the remaining profit from the sale will go towards the purchase which is then topped up with new mortgage and any additional savings you may be using. Hopefully someone will correct me if I'm wrong but as far as I am aware this is how it all works.

In terms of making offers, you're probably best to wait till you have accepted an offer on your current place (obviously you can start looking as soon as!) as although you can offer before you've sold you're not in best position in terms of negotiating and vendors are likely to leave the place on the market even if they accept your offer.

Hope this helps

lifeisgood

By completion day, once he has received the purchase price from your buyer, your solicitor will have gathered together:
Purchase price of property you are selling
Mortgage loan for new property from your lender
Any deposits you have paid re house or his fees

Out of which he will pay:
Purchase price of your new house
Balance outstanding on your old mortgage
Other charges outstanding on your old house
All your legal costs and disbursements incl. stamp duty etc
Any other bills you have asked him to pay. ie estate agents

If there is a shortfall, he will already have asked you for this amount before completion day.
If he is left with any money, he will pass it back to you.

lifeisgood

Saying that an offer is conditional on your selling your flat sounds a bit negative. As if you don't expect to sell. If you are speaking direct to the vendor, they will probably ask your situation, and you could tell them your flat is on the market, and you will let them know as soon as you get an offer.

If offering through an estate agent, they will negotiate on your behalf.

Most people need to sell before they can buy, and if they don't, they are very keen to use this as a negotiating tool.

Ceamonster

Thanks so much to all who answered - this is now much clearer and easier to understand.

alan44

As stated, your solicitor will take any monies from the purchase money you receive, so you shouldn't need any cash yourself. Your new mortgage will be for a set amount (x% of purchase price), so you will know how much will be left over, and your solicitor will only take the amount required. You will need to pay for the mortgage valuation yourself though, usually around £300 for a basic.

As far as your new place goes - remember that the Estate Agent is acting for the seller, and will almost certainly ask your position. If you lie you may find it being sold to someone else behind your back if you hold up the process.

Good luck!

Ceamonster

Thanks for the advice.

I don't agree with lying... even to estate agents

alan44

Ceamonster wrote: »

Thanks for the advice.

I don't agree with lying... even to estate agents

Good! The property market would work a lot better if everyone behaved like that.