How Equity Really Works When You Move Up the Ladder

When you’re moving house, equity is simply:

Property value minus mortgage balance.

But how you use this equity when moving, is up to you.

Example

If your home is worth £700,000 and your mortgage is £400,000, you have £300,000 equity.

That becomes your deposit for your next property; however…

You can use this equity in a number of different ways, not just as your next deposit. You can ‘hold back’ equity which could be used to cover:

• Stamp duty

• Legal fees

• Estate agent fees

• Survey fees

• Potential refurbishment costs of your next home

• Consolidating any debts you may have and wish to pay off (Note, this is something to carefully consider as you will be taking unsecured debt and securing it against your property as well as likely increasing the time it takes to pay this debt off).

Your equity doesn’t all have to go into the next property.