would i still need deposit...?

mrell

Hi

We're currently in a2 need flat worth approx £185-190k. Mortgage totally paid off.

If I manage to find a buyer and sell for e.g. £185k and then find a 3 bed house for £215k, I'm assuming all I need is a mortgage for £30k? (I've got savings for estate agent fee, solicitors fees, stamp duty, surveyor)

Would I still need to put up some sort of deposit and if so, what would I be looking at? Sorry for the "how long is a piece of string"question

BitterAndTwisted

The £185k you sell for will become your deposit, if you want to put the whole lot of it down on the next property. That's if you can find a lender willing to loan that amount. It could be less than their minimum.

retepetsir

Find the lowest LTV mortgage rate possible.

For example with a 40% LTV mortgage, you'd require a 129k deposit for a 86k mortgage to meet the 215k.

Assuming using the full 185k for a deposit, that's 86% of the £215k house so effectively you only need a LTV rate of 14%. I'm not sure if those actually exist! You may be able to find a 15% LTV rate, otherwise it could be 20/25/30%.

ValHaller

The £185000 you sell for will become your equity in the new property. You will still need a deposit to secure the exchange of contract. Conventionally, this deposit is 10%. You will get a 10% contract deposit from your buyer to which you should add £3000 of your cash to be the contract deposit for your purchase. Sometimes there is leeway on the 10% contract deposit.

kingstreet

Typically, the best you'll find is "upto 50%" I don't know of products where they are looking for more than half the purchase price as a deposit.

kwmlondon

ValHaller wrote: »

The £185000 you sell for will become your equity in the new property. You will still need a deposit to secure the exchange of contract. Conventionally, this deposit is 10%. You will get a 10% contract deposit from your buyer to which you should add £3000 of your cash to be the contract deposit for your purchase. Sometimes there is leeway on the 10% contract deposit.

Hang on, not sure that's the case. I'm moving at the moment and the deposit payable upon exchange of contracts comes from my new mortgage - I am not required to have any cash to pay over myself. As I'm selling my flat and buying another property this is fairly standard practise.

I would have thought if you were taking out a mortgage for a small amount then your solicitor will arrange for the payment of the deposit for exchange from the mortgage company.

I may be wrong, but I interpret your situation as similar to mine, structurally, but with vastly different ratios (I'm using an increase in value of my flat to transfer to the new property giving me a 75% loan).

I can check if you think it worthwhile and report back?

kwmlondon

Also, won't your buyer be paying £18,500 to your solicitors on the day of exchange so there'll be that money available to pay £3,000 to your vendor? Is that how it works?

ValHaller

kwmlondon wrote: »

Hang on, not sure that's the case. I'm moving at the moment and the deposit payable upon exchange of contracts comes from my new mortgage - I am not required to have any cash to pay over myself. As I'm selling my flat and buying another property this is fairly standard practise.

I would have thought if you were taking out a mortgage for a small amount then your solicitor will arrange for the payment of the deposit for exchange from the mortgage company.

I may be wrong, but I interpret your situation as similar to mine, structurally, but with vastly different ratios (I'm using an increase in value of my flat to transfer to the new property giving me a 75% loan).

I can check if you think it worthwhile and report back?

No, the mortgage lender will not advance anything towards the contract deposit. There is no property on which to secure the loan.

kwmlondon wrote: »

Also, won't your buyer be paying £18,500 to your solicitors on the day of exchange so there'll be that money available to pay £3,000 to your vendor? Is that how it works?

No. You need a contract deposit of £21,500. The £18,500 contract deposit from your buyer goes towards that and the £3,000 has to be found separately. Fairly obviously it cannot come out of the £18,500.

JimmyTheWig

retepetsir wrote: »

Find the lowest LTV mortgage rate possible.

I think I know what you mean, but I would say with a mortgage of that size you need to be looking at a product with low (or no) fees rather than getting the best rate you can.

kingstreet

Typically, those with equity tied up in their current homes do not come up with cash to make the deposit up to 10%. The solicitors normally push the cash from the first buyer up the chain and that is accepted by all the parties' solicitors.

kwmlondon

kingstreet wrote: »

Typically, those with equity tied up in their current homes do not come up with cash to make the deposit up to 10%. The solicitors normally push the cash from the first buyer up the chain and that is accepted by all the parties' solicitors.

This is what I thought as this is what I'm doing - I'm confused by what VallHaler is telling us. It doesn't chime with what I'm going through and I'd have thought the OP would be in the same situation, pretty much. Let me check with my conveyancer and come back.