Equity for house move

[sparklestar4]

Hello,

My DH and I are planning to move house this year.

Cost of living has completely chipped away at our savings but we do have some left over.

We’ll have around £100,000 in equity and hoping to use some of this towards our deposit plus to cover costs. We’d also like to keep a couple of grand to put into our savings. My question is at what stage of moving will we get the equity money?

Unless I have misunderstood your question, after you complete.

Typically you get the equity at completion of your sale.

So you usually can't use it for a deposit (which needs to be paid at exchange), and can't use it to pay any costs on account, which your solicitors will want in advance, but can use it to settle final solicitors and estate agents costs.

But speak to your solicitors, as they may have other options available to you.

Otherwise you can sell first, rent or stay in a hotel briefly, and then you'd have all the equity available to you for your new purchase.

@WrylyAmusedThanks for the reply. So unless we notify our solicitors at the beginning, we can’t use the equity as a deposit?

Yes you can use the equity as a deposit, it all happens on the same day. So your buyers complete, the money is transferred to your solicitor who then transfers deposit to the mortgage company who then complete the sale.... and then whatever's left will get transferred to you. What you can't use it for is to pay for anything that happens before completion like solicitors, surveys, movers etc

You might not be able to even then. It's not usual. It could be possible if you exchange and compete on the same day, which is a relatively common thing, but 2-3 weeks is more normal.
But if you speak to your solicitors, they'll know what's available for you in your particular circumstances.

Or speak to a mortgage broker. You can e.g. get bridging loans for short periods (i.e the time between exchange and completion), but they're relatively expensive for what they are.

Talk to industry experts (solicitors, estate agents, mortgage brokers) - they deal with this stuff every day and will have the best knowledge of it.

Hello, solicitor here.

On exchange, usually the buyer will pay to (or give to their solicitor) 10% of the purchase price of the property they are buying. This is Deposit, with a capital D. It's a contractual term being that should you change your mind and renege on the contract after exchange but before completion, you forfeit this sum.

When there's a chain involved, usually the deposit travels up the chain - so if you are selling for £120K, you get £12K in deposit from your sellers (you never GET this, really, but stay with me) and if you are buying for £200K your sellers' solicitor will either accept that £12K deposit (which doesn't usually actually travel, it's just "held to order" somewhere in the chain) or you might be asked to pony up a little more to get as close to that 10% Deposit as you can.

When all is said and done, your solicitor will figure out exactly how much you are owed from your sale, sweep that over to your purchase and then figure out exactly how much you are owed. You will usually get that money same day (i.e. completion date - moving day) unless completion happens really late but generally, it's a same day thing.

If all your money is tied up in the house, i.e. not available until you actually sell it, then you might have to do either a simultaneous exchange and completion (same day for both, not recommended) or find out as early as possible what you will receive as Deposit on your sale, press them to find more to get it to the 10% if you have to, and then either ask your sellers if they'll accept a reduced deposit (90% will say yes, if reasonable figure being talked about) or find that money somehow. Beware - if "finding the money somehow" your solicitor will have to ask you to account for every £, ID every party contributing and your new mortgage lender will have requirements re: other people putting funds into your house in terms of the money YOU put in (people also call this "deposit" funds when it isn't really - perhaps "deposit with a small d"!).

Best of luck - try not to worry, it all works out in the end. Don't overthink it.

TCT.

Yes you can. The proof of funds will be the equity rather than funds in a bank account. When we moved house we didn’t hand any money over beforehand apart from things like search fees which had to be paid in advance. Once we had completed, the equity landed in our bank account minus the solicitor fees, estate agent fees and deposit.