Paying a deposit and money tied up in present property

monkeyboy72

Hi all, I’m after a bit of advice regarding paying a deposit for new property and having the deposit tied up in my present property.

Basically I have around £30000 available equity in my present property and when I buy my next place I want to use this as the deposit for my next home. I don’t have any other money available apart from this (apart from sols fees etc etc).

I’m living in my first time buy and this will be my first time buying a 2nd property, I’ve noticed in some guides I have read that when I buy my next place that I should pay the deposit when the contracts are exchanged then the remaining balance on transfer day, what then happens if I don’t have the money available until I receive my money from the people buying my property on transfer day?

Can anyone explain how this works and is it something I should be worried about?, thanks in advance.

property.advert

You cannot remortgage your current property to 100% LTV to provide a deposit on another property.

You simply do not have enough money to buy a second property and you should concentrate on putting together a rainy day cash sum of 12 months bills and outgoings. This should be your first priority, not another property.

DannyboyMidlands

You need to save up a bit more money so that you can pay the deposit.

CLAPTON

I assume you mean you are selling your existing property and buying another one.

then you usually need to provide 10% deposit when contracts are exchanged

if you don't have the money then you can ask your bank if they will provide a bridging loan to cover the period between contract exchange and completion

kingstreet

monkeyboy72 wrote: »

Hi all, I’m after a bit of advice regarding paying a deposit for new property and having the deposit tied up in my present property.

Basically I have around £30000 available equity in my present property and when I buy my next place I want to use this as the deposit for my next home. I don’t have any other money available apart from this (apart from sols fees etc etc).

I’m living in my first time buy and this will be my first time buying a 2nd property, I’ve noticed in some guides I have read that when I buy my next place that I should pay the deposit when the contracts are exchanged then the remaining balance on transfer day, what then happens if I don’t have the money available until I receive my money from the people buying my property on transfer day?

Can anyone explain how this works and is it something I should be worried about?, thanks in advance.

You don't pay a cash deposit. On the day your sale and purchase complete, your solicitor gets the sale proceeds from your buyer's solicitor. He repays your old mortgage, leaving the equity you built up in your old home. He then adds that to the new mortgage money for your new home and pays that to your vendor's solicitor to complete your purchase.

He'll normally collect his fees and any disbursements and stamp duty from this, so don't forget to make an allowance for them, or add some cash to the mix just before completion to cover these costs.

monkeyboy72

Thanks guys - apologies I think I may have worded my OP incorrectly, yes I am moving into the new property, Kingstreet, you provided the answer I needed, thanks.

Thrugelmir

kingstreet wrote: »

You don't pay a cash deposit. On the day your sale and purchase complete, your solicitor gets the sale proceeds from your buyer's solicitor.

You are overlooking the deposit on exchange of contracts.

hcb42

I have never paid a deposit on exchange (aprt from first house). the fact there has been a sale and purchase on same day has always been sufficient, and I remember 1 solicitor at least explaining this was ok. I have bought/sold 6 times, has something changed lately?

safeashouses

You don't actually pay the deposit, you are just liable for it if you do not complete for some reason.

kingstreet

In my 28 years doing this job and having done plenty of same day sales and purchases of my own, neither me or any of my clients have ever been asked for a deposit when the equity in our current homes was the difference between the mortgage and the purchase price.

mrsmchapman

Thanks, this as also answered a question I was going to post, currently in the process ready for exchange and we were unsure as to how deposit was paid also.