Deposits?

Leedsseller

hi,
I bought my house 2 years ago for £100,000. I want to buy a house for £150,000. My house is for sale for £105,000. As I would have to pay an early repayment charge, I want to keep the first mortgage and take out the extra £50,000.
Would I need a deposit of, say, 10% of the full price of the new house (£15,000) or the new borrowed money (£5,000)?

Thanks in advance.

_Andy_

10% of the new property value

Sonofa

The deposit you pay has nothing to do with your mortgages, it is a matter between you and the seller.

The deposit is typically 10% of the agreed sale price, but this could be negotiated such that the deposit you receive from your buyer could be used as your deposit on the new house. Avoids having to find the readdies.

Tiddler_2

Sonofa wrote: »

The deposit you pay has nothing to do with your mortgages, it is a matter between you and the seller.

The deposit is typically 10% of the agreed sale price, but this could be negotiated such that the deposit you receive from your buyer could be used as your deposit on the new house. Avoids having to find the readdies.

The deposit you pay has EVERYTHING to do with the mortgage. The deposit you have available dictates

1) whether you can get a mortgage (i.e no deposit means no mortgage)
2) It dictates the interest rates that you qualify for.
3) Deposit plus mortgage, gives you the max house price you can look at.

So at the moment the deposit is very very important.

As Andy says, the minimum deposit you currently have to have is 10% of the price you are paying for the new property. You need to check that your current lender that they will do a 90% mortgage, as currently not all companies do, and then will they allow you to port the mortgage deal to the new property

_Andy_

Sonofa wrote: »

The deposit you pay has nothing to do with your mortgages, it is a matter between you and the seller.

So you're saying the OP can get a 100% LTV mortgage?

Joe_Bloggs

In my view there may be scope for confusion when one uses the term deposit in the case of mortgages. Shelter has a link that relates to signing contracts and house exchange.

Case 1)
In this sense you would have to pay a deposit even if you had no need for a mortgage as it is the price you will pay for pulling out of the signed contract, between buyer and seller (often 10% of the purchase price). These details are handled by the conveyancing solicitors.

Case 2)
The other type of deposit is that provided by a borrower to form part of the equity in a mortgage loan. The larger this equity the less risk, the better the interest rate , in general . This has been 0% in the case of 100% loans in the past thus the initial deposit or equity in the property can be anything from 0% to a large number even in the nineties.
The deposit supplied in case 1), can form part of the equity mentioned in case 2) by the party that receives the deposit from the buyer (vendor /seller ).

Cross over case.
When the borrower does not have enough deposit to cover case 1), then the lender will supply/negotiate a deposit with the vendor.

I am sure there are more informed contributors than me who know these details inside out. If I have got the wrong impression of how things work then put the record straight.

J_B.

Sonofa

@ Tiddler and Andy

You misunderstand what I mean. I'm not talking about LTV I'm talking about the principle of paying a deposit to the the seller on exchange of contracts.

In this instance the 'deposit' has nothing at all to do with any mortgage you may or may not need. As I said, it's simply a matter of agreement between you and the seller.

Using the term deposit in the context you both cite is incorrect; you'd hardly call it a deposit if you were putting down 90% of the agreed price would you.

Joe B's case 1.