Can You Use the Equity in Your Home as a Deposit for Your Next Move?
If you’re thinking of selling, you may be wondering how to fund the deposit on your next property. The good news is that, in many cases, the equity in your current home can do exactly that.
It’s one of the most common ways people move up, downsize or invest and it can make your next purchase far more achievable than you think.
What Is Equity? Put simply, equity is the difference between what your home is worth and what you still owe on your mortgage.
For example, if your property is worth £500,000 and your remaining mortgage is £300,000, you potentially have £200,000 in equity (before fees and costs are taken into account).
Many homeowners use this equity as a deposit on their next property. Doing so can reduce how much you need to borrow and improve your loan-to-value (LTV) ratio, often giving you access to more competitive mortgage products.
What About Negative Equity? Negative equity occurs when the amount you owe on your mortgage is more than your home is currently worth.
While this is less common in stable markets, it can happen if property prices fall significantly after purchase.
If you’re unsure where you stand, it’s important to get accurate, up-to-date figures before making plans.
How Do You Work Out Your Equity? Start by getting a realistic valuation of your property, not just an online estimate, but an informed, local appraisal.
Then check your latest mortgage balance. Subtract what you owe from your property’s likely sale price, and you’ll have a clearer picture of your potential equity.
Of course, you’ll also need to factor in selling costs, legal fees and stamp duty on your next purchase, but this gives you a strong starting point
Can You Use Equity for Buy-to-Let? Yes, equity can also be released to fund a deposit on a buy-to-let property.
Bear in mind that buy-to-let mortgages typically require a larger deposit, often 15–25% of the property’s value. The right advice is crucial here, particularly when structuring borrowing for investment purposes.
Thinking About Your Next Move? Understanding your equity is often the first step towards making confident decisions, whether you’re upsizing, downsizing or investing.
If you’d like a clear picture of what your home could be worth in today’s market, we’d be delighted to help.
Our team can provide a realistic valuation and, alongside our mortgage specialists, help you understand what may be possible. Chat to our Mortgage Team today.
Give us a call today and let us help you make your next move or click here and book a time directly into our diary.
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