Moving without Deposit

bongo

Not really sure how this works but just want some clarification. Basically i'm considering moving to a new property circa 200k. I currently own a 150k property with 105k mortgage and approx 45k of asset.

Can I simply sell up and put an offer on a 200k house without any deposit? My LTV is better than 80% even if I take out a top up product to my existing mortage for 50k - or would I need a deposit to do this?

kingstreet

On the day you sell your old property, your solicitor gets the purchase money, repays your current mortgage and holds your equity ready for your new purchase.

You take out a new mortgage for your new home. The money comes to your solicitor on completion day. He adds it to your equity, deducting any fees, so don't forget to allow for them, and pays it all over to the vendor's solicitor to complete your purchase of your new home.

Here's an example;-

£150,000 sale
£105,000 mortgage repaid on completion day

£45,000 equity left over held by solicitor.
£5,000 to cover fees

£40,000 deposit for next purchase

---

£200,000 purchase of new property
£40,000 deposit being held by solicitor

£160,000 new mortgage for new property needed.

If you take the new mortgage with your current lender, you may be able to "port" a good mortgage rate from your old mortgage for the first part of your new one. Anything over and above that can be taken on one of the lender's current products.

If no great rate to transfer over, you can pick the best product you can find from any lender who will lend to you.

Thrugelmir

On the day you exchange contracts you'll need to provide a 10% deposit. So £20k on a £200k property.

If you don't have the "cash". You'll need to arrange to borrow this in order to fund the purchase.

kingstreet

Thrugelmir wrote: »

On the day you exchange contracts you'll need to provide a 10% deposit. So £20k on a £200k property.

If you don't have the "cash". You'll need to arrange to borrow this in order to fund the purchase.

There is no need to do this on a sale and purchase. The purchaser's equity in their current home is held as the deposit.

bongo

Sorry forgot to post back on this but thanks both for the advice

Trying_to_be_good

kingstreet wrote: »

There is no need to do this on a sale and purchase. The purchaser's equity in their current home is held as the deposit.

We've always had to 'top-up' to the 10% of the purchase price on exchange - our buyer's 10% of our selling price covered the first bit, but the rest (buying a more expensive property) of the 10% of our purchase price had to be held by the solicitor on the exchange date.

So, new home £300k, old home £200k. Deposit from buyers = 10% of £200k = £20k, deposit required for new home is 10% of £300k = £30k, so we needed to add £10k to our buyer's £20k. This was a couple of years ago, but I think is still the same as the process now?

The_J

Depends on your solicitor. I've always had decent ones not big, corporate, faceless, automated firms.

Ivana_Tinkle

Trying_to_be_good wrote: »

We've always had to 'top-up' to the 10% of the purchase price on exchange - our buyer's 10% of our selling price covered the first bit, but the rest (buying a more expensive property) of the 10% of our purchase price had to be held by the solicitor on the exchange date.

So, new home £300k, old home £200k. Deposit from buyers = 15% of £200k = £20k, deposit required for new home is 10% of £300k = £30k, so we needed to add £10k to our buyer's £20k. This was a couple of years ago, but I think is still the same as the process now?

You don't always need to do this. Our solicitor has always asked our sellers if they'll accept however much we're receiving from our buyer as the deposit on exchange and no one has ever refused. (eg in your example, we'd just pass on the £20k, and that's always been good enough.) It doesn't necessarily have to be 10%, although I think that is the standard and it's a bit "if you don't ask, you don't get".

[Deleted User]

Trying_to_be_good wrote: »

Deposit from buyers = 15% of £200k = £20k

You need to have a chat with your solicitor. He's been siphoning off £10k from you every time you move.....

Ivana_Tinkle

Also, what The J said!

Trying_to_be_good

Deleted_User wrote: »

You need to have a chat with your solicitor. He's been siphoning off £10k from you every time you move.....

Changed my argument half way through from it needing to be 15% and actually being 10% - my head thinks faster than my fingers type, unfortunately! (Although the solicitor does seem to have a new car...)