Deposit at exchange of contracts

garrunt

Thrugelmir wrote: »

We had the deposit available in cash without selling either property.

Was back in 2007. We considered property to be OTT in price. So were happy not to expose ourselves to unnecessary risk or cost. House moving is stressful at the best of times without complicating the situation.

We too would prefer not to have too much exposure. But we afford to sell the 2nd after the house purchase. The current issue is this cash deposit,..but I think my suggesiton of pulling cash out of my exisiting mortgage could work ...do you think ?

hcb42

jsut tie up your purchase with the sale of one of the flats - which is what most people do in a chain, effectively

garrunt

hcb42 wrote: »

jsut tie up your purchase with the sale of one of the flats - which is what most people do in a chain, effectively

Thanks, this is the plan. The point if the thread is how to provide a CASH deposit at exchange of contracts when all equity is tied up in flats.

powerwin

Out of interest:

How much is Flat 1 worth?

How much equity do you have in Flat 1?

How much is Flat 2 worth?

How much equity do you have in Flat 2?

How much is the house you want to buy?

What percentage of deposit do you want to put down on the house?

Rgds

garrunt

powerwin wrote: »

Out of interest:

How much is Flat 1 worth?

How much equity do you have in Flat 1?

How much is Flat 2 worth?

How much equity do you have in Flat 2?

How much is the house you want to buy?

What percentage of deposit do you want to put down on the house?

Rgds

I''m making numbers up here for privacy, but they are all in propertion to our real siuation

Flat 1 worth 200 with 199 equity
Flat 2 worth 200 with 150 equity
What % I want to put down on new house ?? ...as little as possible !!! but I guess standard is about 10%
New house 800

= plenty of equity but no cash for deposit !

Senior_Paper_Monitor

AS the OP has realised earlier ..... returning the overpayments is the cheapest option.

Second alternative is a secured loan (should be easier and cheaper than bridging).

Third alternative would be remortage flat(s) as BTL to a level where rental cover is comfortable (but appreciate OP's wish not to get involved in this).

Fourth alternative - remortgage flat standard (capital raising for new property) using a no/low ERC and/or offset option allowing for slow sale.

I repeat the 'risk warning' that in the event of failure to sell the flats, and possible resulting inability to obtain mortgage, to complete sale leaves deposit at risk of total loss.

garrunt

Senior_Paper_Monitor wrote: »

AS the OP has realised earlier ..... returning the overpayments is the cheapest option.

Second alternative is a secured loan (should be easier and cheaper than bridging).

Third alternative would be remortage flat(s) as BTL to a level where rental cover is comfortable (but appreciate OP's wish not to get involved in this).

Fourth alternative - remortgage flat standard (capital raising for new property) using a no/low ERC and/or offset option allowing for slow sale.

I repeat the 'risk warning' that in the event of failure to sell the flats, and possible resulting inability to obtain mortgage, to complete sale leaves deposit at risk of total loss.

Thanks for the summary of options. On the fourth alternative do you mean just remortgage one flat on normal mortgage but with low fees/low repayment fees ? And can you spell out to me what ERC stands for ?

Regarding risk. Do you just mean that our deposit on the new more expensive property might be at risk beyond the value of the deposit logged by buyer of flat sale 1, if the whole deal fails between exchange and completion ?

Thrugelmir

ERC - Early Repayment Charge

Senior_Paper_Monitor

Your deposit will be at risk

This may be offset by any deposit held by your solicitors (after exchange) from your purchaser - frankly if both you and the purchaser of your property have exchanged then your risk is minimised (to any any difference in the value).

garrunt

Senior_Paper_Monitor wrote: »

Your deposit will be at risk

This may be offset by any deposit held by your solicitors (after exchange) from your purchaser - frankly if both you and the purchaser of your prperty have exchanged then your risk is minimised (to any any difference in the value).

Yep, like I say this is a risk anybody would take in upsizing as the deposit they paid would be larger than the deposit paid by their buying.

We are hoping to mitigate this risk by asking our seller to accept a 5% deposit while collecting a 10% deposit on our sale. It's worth a try !

Agreed the risk of losing deposit/fall through after exchange of contracts must be pretty small either way.