Do I need another deposit to buy my second home???

dee86

We have found a buyer for our property and ready to put an offer on a house we want. After speaking to our mortgage advisor (who we liaised with before we put our property on the market and failed to mention this point) he now says we need to have a deposit to buy the new house of at least £14k! I don't understand why our existing property will not be classed as a deposit towards the new one? We paid £100k for it, we have £90k left on the mortgage and are selling it for £100k. The new house is £145k. Help!!:(

horngkai

would that be £14k including the £10k equity you are getting from your current house or not?

Conrad

Yes your £10k can go towards the costs and deposit.

Funds needed;

£2k for selling agents fees?
£1450 stamp duty
£2000 Solicitors?
£400 for basic survey
£1000 'just in case', for example if you lost the property and had to again pay survey and some legal fees
£500 for possible interim interest

£14500 deposit on new property.

Total you need (to include the £10k comming from your sale) = £21850 APPROX'

You may also want to have a slush fund, for example if you had to make repairs to say the boiler upon moving in. It is also prudent to have 6 months income sitting in an emmergency fund in case you lost your job etc.

dee86

I don't know? I really don't understand this. I thought that once you were on the housing ladder it was easier to move up and you didn't need "deposits". Call me naive but the 10k we have already paid off mortgage would surely count as a deposit so wouldn't we just need to raise £4.5k? I didn't think we would need anything at all except to be able to afford the new monthly payments (and of course solicitor fees etc).

Conrad

dee86 wrote: »

I don't know? I really don't understand this. I thought that once you were on the housing ladder it was easier to move up and you didn't need "deposits". Call me naive but the 10k we have already paid off mortgage would surely count as a deposit so wouldn't we just need to raise £4.5k? I didn't think we would need anything at all except to be able to afford the new monthly payments (and of course solicitor fees etc).

I've set out your position.

I'll try again;

You can use that £10k and add £4.5k as you suggest and this will be your new deposit.

The rest of the monies required I have outlined above, and you will need to find at least the basics amongst these such as the selling agents fees.

Thrugelmir

When you exchange contracts your will need to put down a deposit (normally) of 10% of the purchase price. Your solicitor will pass this money to to the vendors solicitor. If you fail to complete on the purchase the vendor will be entitled to retain this.

So while you have equity in your existing property, you will also need cash to conduct the transaction.

JimmyTheWig

What mortgage deal are you going for?

dee86

We're on a tracker with halifax that we intend to stay on for the £90k we've got left to pay off existing mortgage and then the additional money would be borrowed at a different rate.

Shows how little I know about finances, good job I work in medicine!

So really, we only need to find £4.5k towards deposit and then everything else on top will be solicitor fees, surveys & stamp duty (we are not using EA)

JimmyTheWig

Have you got an agreement in principle from the Halifax for this additional borrowing?
What have they said about deposit / loan to value?

Conrad

dee86 wrote: »

So really, we only need to find £4.5k towards deposit and then everything else on top will be solicitor fees, surveys & stamp duty (we are not using EA)

Yes.

On exchange a solicitor may ask for some actual cash but this is by no means the case. Discuss with them now to clarify. In the recent past many a buyer used a 100% mortgage so this thing about a 10% depsoit needed on exchange is one of those things you learn from mortgage textbooks but has little basis in reality.

dee86

Lol now i'm even more confused. Are there 100% mortgages out there?

We haven't been dealing with halifax direct and don't have an agreement in principle. We are dealing with our independent mortgage advisor who is contacting halifax on our behalf. I've just sent him an email, maybe with things in writing it will be easier for me to get my head around :eek: