Very basic question about mortgages and moving house.

[fifitot]

Forgive me if I sound like an idiot - I am when it comes to money!

I have a house with about £100 grand equity in it. However I also have no savings really. If I bought a new house, I would just use some of the equity as a deposit on the new house wouldn't I? However I would have to use some of it for the cost of moving too - would I be able to get a short term loan on that basis to cover moving costs? To be paid back on completion?

Really haven't moved as been in this house for years so can't remember how it all works.

Yes to equity - the solicitor will deal with this, once they've taken out their fees, tax etc.

re moving costs - not sure! But someone will be along soon I hope

I think last time I move house (which is also a long time ago) I paid the removal company a deposit and settled up the bill after the completion. I remember borrowing slightly more on the mortgage than was strictly necessary, buying furnishings on the CC and settling everything up after getting the balance.

Thanks. I was thinking I would need to pay the legal fees, moving costs etc which can add up to alot of money out of the equity. I guess could use a cc for moving costs but not legal fees. Maybe I could get a loan or something to cover that until equity comes through?

Ask your solicitor before you do anything hasty. Legal fees, stamp duty, removal costs, surveyors fees etc add up to quite a lot and very few people have large amounts of money spare after paying deposits on houses. Your solicitor should be able to advise.

when you sell your house the equity will be paid to your solicitors account. he will then take out his fees, stamp duty, etc, and transfer the remaining balance to your bank account.

with regards moving costs you would probably pay a deposit when you book them, then the balance after the move, by which time you would have the money transferred from your solicitor.

oh, and a deposit on a house isn't like a normal deposit you pay in advance of purchase, it just means the amount of money you have so that you don't need 100% mortgage. the full amount is paid all at once.

Thanks.

Just to mention - don't forget to include in your sums any stamp duty you may have to pay on new house....