Deposit Required on 2nd Mortgage?

Super_Ally9

Hi,

I am pretty clueless when it comes to mortgages so hopefully someone can help.

2.5 years ago me and the mrs bought our first house. we are now thinking of moving and would be upsizing, obviously meaning a bigger mortgage than what we have just now.

we paid a 5% deposit on our current place but with only having been paying the mortgage for a couple of years and the drop in the market, our house will likely have devalued so we may be in negative equity. now i had thought that if we want a new mortgage on a bigger place you didnt need a deposit as you used the equity from your current place basically as a deposit, therefore since we have no equity we would need to save another deposit. just wondering if this is in fact correct.

the reason i ask is that my folks are also moving just now and while chatting with their estate agent they mentioned us wanting to move but having no deposit. the girl said that as we werent 1st time buyers we wouldnt need 1 and reccomended we see their financial advisor. i assume she has misunderstood my folks and thinks that we do have equity and this is why she thinks it would be ok without the deposit.

so anyway hopefully someone can clear this up for me!

thanks in advance

JSR

As far as I know there are no mortgages for purchases that accept more than 90% LTV. Save a few FTB deals that go to 95%. So if you have no equity you will definitely need a deposit (and cash to cover any negative equity.)

hcb42

yes, you will need an even bigger deposit than a FTB would have in effect, partly to pay off the negative equity, and partly as the bigger the deposit the better on the new place.

Super_Ally9

thanks guys, pretty much what i thought.

it's just frustrating as it's a great time to upsize as the money saved in the price of the new property completely cancels out (and more) ther money lost on the current place so it would be daft not to move if you had deposit money available!