Simple mortgage question - which is causing a big panic!!

JoHoward

Basic question on a deposit which is concerning me as I can't find the answer:

I'm going to be selling my house to buy a brand new one.

I need a 20% deposit which equals £45k

I will have £20k in cash the rest is coming from the difference between the amount I have outstanding on my mortgage and the lowest price I will accept for my current house (which isn't a unrealistic price)

If the house builder wants 20% paid how do I pay them the part which is tied up in the mortgage of the house? I've read that you can only use the deposit amount your buyer gives to you on exchange day? Is this correct?

Starting to panic a little!!

Thanks

kingstreet

The equity in your home will be part of the purchase monies which change hands on completion day.

You need to agree with the builder the amount you hand over for exchange of contracts if some of your capital is tied up in your home.

Your solicitor will do this in conjunction with the builder's solicitor. This is normal. In a chain, the cash from the buyer at the bottom of the chain is passed up the chain, becoming a smaller percentage of the purchase price as it goes, as usually, the purchase prices are higher the further along you go.

JoHoward

So as long as the builder would accept the £20k the remaining balance of £25k coming from the house can be paid on the day we complete.

Probably best then to work more toward the £25k in cash as it's over 10% of the purchase price. Would have a better chance then I'm guessing of them saying yes.

ethank

I bought a new house from Taylor Wimpey and all of my deposit was either the deposit given to me from the buyer of my flat, or my equity in my home. There was no issue at all with this.

We exchanged on the flat first, and then exchanged on the house we were buying about 1 hour later, so not even enough time for any money to change hands!