When you sell your house, the equity you’ve built up becomes available to you. This money represents the portion of your home’s value that you truly own, and it can be a significant financial asset.
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What Happens to Equity When You Sell Your House?
Equity is the difference between your home’s current market value and the amount you still owe on your mortgage. When you sell your house, this equity becomes accessible as cash.Here’s how it typically works:
- Your house sells for its current market value
- The outstanding mortgage balance is paid off
- Any selling costs (estate agent fees, legal fees, etc.) are deducted
- The remaining amount is your equity, which you receive as cash
For example:
| Item | Amount |
|---|---|
| House sale price | £300,000 |
| Outstanding mortgage | -£150,000 |
| Selling costs | -£10,000 |
| Your equity | £140,000 |
This equity can be used for various purposes:
- As a deposit on your next home
- To fund home improvements
- For retirement planning
- To invest in other assets
How Does Equity Build Up?
Equity in your home grows in two main ways:
- As you pay down your mortgage
- If your property increases in value
Making overpayments on your mortgage can help build equity faster. Home improvements can also increase your property’s value, potentially boosting your equity.
What If I Have Negative Equity?
Negative equity occurs when you owe more on your mortgage than your home is worth. This can happen if property values fall significantly.
If you’re in negative equity:
- You may struggle to sell your home
- You might need to make up the shortfall if you do sell
- It’s worth speaking to your mortgage lender about your options
Can I Sell My House If I Have Equity Release?
Yes, you can sell your house if you have an equity release plan, but there are some things to consider:
- You’ll need to repay the equity release loan from the sale proceeds
- There may be early repayment charges
- The amount you owe could be more than you initially borrowed due to interest.
What About Shared Ownership?
If you’re selling a shared ownership property, you’ll only receive the equity from your share. The housing association will receive the proceeds from their share.
How Can I Maximise My Equity?
To increase the equity you receive when selling:
- Make home improvements to boost your property’s value
- Pay off more of your mortgage if possible
- Reduce selling costs by comparing estate agent fees
- Consider selling at the right time in the property market cycle.
How Can I Maximise My Equity?
To increase the equity you receive when selling:
- Make home improvements to boost your property’s value
- Pay off more of your mortgage if possible
- Reduce selling costs by comparing estate agent fees
- Consider selling at the right time in the property market cycle.
What If I’m Downsizing?
Downsizing can be an effective way to release equity. By moving to a less expensive property, you can free up cash from your home’s value.
Do I Need to Pay Tax on My Equity?
In most cases, you won’t need to pay tax on the equity you receive from selling your main home. However, if you’re selling a second property or buy-to-let, you may need to pay Capital Gains Tax.
How Quickly Can I Access My Equity After Selling?
You’ll typically receive your equity on the day of completion, once all the legal processes are finished. This is usually transferred directly to your bank account by your solicitor.
Remember, selling a house and managing equity involves important financial decisions. It’s always wise to seek professional independent advice tailored to your specific circumstances.
From Family Home to Forever Home: Unlock Your Golden Years
Equity release might seem tempting when you’re looking to free up some cash, but it’s got some real downsides compared to moving to a smaller, more suitable home like a bungalow. With equity release, you’ll get less than your house is worth, and the interest piles up over time, eating away at what you can leave to your family. It can also tie your hands if you want to move or change things up in your home later on.
On the flip side, downsizing to a bungalow that’s set up for your needs lets you get at your money while sorting out a place that’ll work for you long-term. It could even save you some cash on bills and upkeep.
But let’s be honest, downsizing isn’t always a walk in the park. Finding the right bungalow can be a right pain, especially since there aren’t that many about. Moving itself can be a headache and cost a fair bit with all the fees and whatnot. Plus, it’s not easy leaving a home full of memories.
This is where Property Saviour comes in handy. We’ll buy your current house quick and easy, for cash. No messing about with equity release schemes or waiting ages to sell. You get your money sharpish, giving you the freedom to go after that perfect forever home without being stuck in a long, drawn-out selling process.
We’re flexible too – we’ll work to your schedule, so you can take your time finding the right place without all the stress. It’s about making your move to a more suitable home as smooth as possible.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
