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    • Ecologygirl
    • By Ecologygirl 11th Jul 17, 3:48 PM
    • 1Posts
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    Ecologygirl
    Deposit for buying 2nd house from selling 1st
    • #1
    • 11th Jul 17, 3:48 PM
    Deposit for buying 2nd house from selling 1st 11th Jul 17 at 3:48 PM
    My Husband and I are moving to a new home and selling our current one.

    New house = £400,000
    Selling house for = £300,000
    Remaining mortgage = £210,000

    We will be getting an entirely new mortgage of £330,000 (82.5% LTV).

    Obviously there is "equity" of £90,000 in the house we're selling and a shortfall of £70,000 between purchase price and mortgage amount.

    I am clear on the fact that the money to make up the difference comes from the equity in the house I'm selling but do I have to come up with a deposit for the house purchase in addition to this? Even though if we were 1st time buyers, having £70,000 would mean we had a 17.5% deposit?

    If I have to have a deposit prior to completion as well, would most lenders be happy with 5%?

    If its relevant, my husband and I make roughly £85k combined and have no debt (other than I have student loans still).

    I'm honestly just confused about having to get a deposit when we're borrowing less than 90% of the house value.

    Any help greatly appreciated!

    Thanks
Page 1
    • silvercar
    • By silvercar 11th Jul 17, 3:54 PM
    • 35,524 Posts
    • 149,819 Thanks
    silvercar
    • #2
    • 11th Jul 17, 3:54 PM
    • #2
    • 11th Jul 17, 3:54 PM
    The question you should be asking is whether your seller's will be happy with a deposit less than 10%. Most would understand your situation and accept that you will exchange with a smaller deposit. Generally your buyer's deposit is passed up the chain, providing you all exchange at the same time. So you take your buyer's deposit add your bit to it and pass it up.

    If your buyer's pay you a 10% deposit, that gives you a £30k contribution to your deposit.

    If the whole chain can't agree on deposits then the other option is to exchange and complete on the same day.
    • kingstreet
    • By kingstreet 11th Jul 17, 5:13 PM
    • 31,620 Posts
    • 16,891 Thanks
    kingstreet
    • #3
    • 11th Jul 17, 5:13 PM
    • #3
    • 11th Jul 17, 5:13 PM
    Your buyer's deposit, or the first cash deposit in the chain passes up the chain becoming a smaller percentage of the higher purchase prices as it goes.

    Solicitors will agree this between themselves and their clients. You are backed by your equity in the property so you should not have to come up with any cash.

    Neither I, nor any of my clients have had to do that in the 33 years I've worked in the property/mortgage industry and in the times I've bought and sold...
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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