would i still need deposit...?

kwmlondon

ValHaller wrote: »

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


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.

Why would the OP need a contract deposit of £12,500? He/she's only borrowing £30k? Surely 10% of that would be £3k? And they'll be getting the contract deposit on £180,000-ish at the same time so why would they then need to have any money to pay a deposit from another source? I'm a bit confused here.

kwmlondon

kwmlondon wrote: »

Why would the OP need a contract deposit of £12,500? He/she's only borrowing £30k? Surely 10% of that would be £3k? And they'll be getting the contract deposit on £180,000-ish at the same time so why would they then need to have any money to pay a deposit from another source? I'm a bit confused here.

Nope, I'm being an idiot, I know what I did there I mistook the mortgage amount for the purchase amount. Makes sense now.

dotdash79

You need a mortgage with no fees if possible the amount and term of the mortgage won't make products with fees worth while.

I suspect that you are looking for a term of around 10 years?

ValHaller

kwmlondon wrote: »

Why would the OP need a contract deposit of £12,500? He/she's only borrowing £30k? Surely 10% of that would be £3k? And they'll be getting the contract deposit on £180,000-ish at the same time so why would they then need to have any money to pay a deposit from another source? I'm a bit confused here.

OP would need a contract deposit of £21,500 because that is 10% of the purchase price of £215,000. This deposit is from buyer to seller and the mortgage does not come into the calculation of 10% of the price being paid.

As I said, OP - or his solicitor - will be receiving a deposit of £18,500 from his sale, so he has £3,000 to find on top of that

That is the standard contract of sale conditions - often solicitors negotiate something different, so OP might not get as much as £18,500 contract deposit and might not need to pay the full £21,500. But you do need to have a bit of spare available to top up the contract deposit.

edit: I see this is resolved!

mrell

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?

Hi kwmlondon,

If you have a property that you have no mortgage to pay on them yes we are in similar situation...

I'm quite new to all this so it's good to digest all your comments....

mrell

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?

If that's the case then I don't have to worry about saving up deposit?

mrell

ValHaller wrote: »

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


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.

Aha... so I understand I'll need to get £3k to add to my buyers deposit to make the theoretical 10% deposit of the £215k property.

Am I right in what I'm saying

mrell

ValHaller wrote: »

OP would need a contract deposit of £21,500 because that is 10% of the purchase price of £215,000. This deposit is from buyer to seller and the mortgage does not come into the calculation of 10% of the price being paid.

As I said, OP - or his solicitor - will be receiving a deposit of £18,500 from his sale, so he has £3,000 to find on top of that

That is the standard contract of sale conditions - often solicitors negotiate something different, so OP might not get as much as £18,500 contract deposit and might not need to pay the full £21,500. But you do need to have a bit of spare available to top up the contract deposit.

edit: I see this is resolved!

OK valhaller, if that's the way it goes then I think I get it... Thanks for putting things into context for me.

Kmwlondon I think you'll agree with valhaller? If so then I'm confident by the advice and I know what to do...

Also I'm assuming OP stands for original poster? Thanks all

JimmyTheWig

mrell wrote: »

Aha... so I understand I'll need to get £3k to add to my buyers deposit to make the theoretical 10% deposit of the £215k property.

Am I right in what I'm saying

You are right technically.
From my experience (buying three times over the last 14 years) it isn't needed. I've never been asked for deposit money up front.

kwmlondon

Well, this is on the easier2move website's FAQ page:

How much deposit will I need?

It is normal for a deposit to be paid on exchange of contracts. Although many people think 10% is required that is often untrue. If you are buying and selling your solicitor can usually use your buyers deposit in connection with your purchase so you will not have to find anything.

http://easier2move.co.uk/Conveyancing/Conveyancing-FAQ.aspx

I think that the key-word here is "usually" and that you can probably work on the basis you'd not have to find any extra money. However, to be totally sure you'll need to speak to a conveyancer.

I'm going to email mine and report back the answer.