Mortgage deposit problem

Radiatormannw

So here is the conundrum

I have a home which is mortgage free and worth 100k , I want to move house and have seen a property worth 230k, I want a mortgage for 130k and have been told I need to get a deposit equal to 10% of the purchase price of the property I want to buy.

This cannot be correct can it?

I have £100,000 in equity or 43% of the value of the house, but I am classed as needing a 100% mortgage if I have no deposit (requiring 130,000 with no deposit is a 100% mortgage).

I cannot believe that someone with no debt or loans who pays of the credit card each month without fail and has a professional secure job cannot get a mortgage or the money to move house

One thing I will point out is that both my wife and I are in our early 50s and have good jobs with a clean credit history and sufficient funds to enable the new mortgage to be paid off within 10 to 12 years but we would still need to get this huge deposit together despite already being on the housing ladder and equity rich.

The lending criteria has changed to such an extent to exclude people like us who could stimulate the housing market by moving from our first time buyers house and allowing someone to buy our home and then get themselves on the housing ladder. Of course I can hear the groans and gasps of those out there who are saying just sell your house and move into rented accommodation for a few months. Yeah if was that simple and I knew the mortgage was guaranteed and not just valid for 2 or 3 months as they now are then yes I may do that, BUT would you give up your own home which you own and move to rented accommodation and hope and pray that the lenders would not renege on you and then deny you a mortgage and trap you forever in rented accommodation. I think not!

I am quite a savvy person but I just cannot see a way out of this, even if I take out a unsecured loan for the deposit this will go against us when applying for the new mortgage as the deposit has to be from a non-repayable source and the means NO loans.


I do not want a bridging loan, in fact I doubt you can even get them without a deposit of some sort


Has anyone else encountered this and is there a way around this

ACG

Whoever has told you that is wrong. You do not need a deposit if your deposit is coming from the sale of your house. You have your deposit as equity.

Im assuming the figures given are rounded off and you have taken into account things like solicitors costs, stamp duty etc.

kingstreet

Are you selling your current home to purchase the new one?

Where is this information coming from?

Is this about deposit, or is it about affordability in that you are being asked to reduce your mortgage amount because the lender thinks you cannot afford £130,000 over the time until you reach state pension age?

pinkcheshirecat

What you need is to finance the purchase at say 230k, plus any solicitors fees, searches and any other fees such as stamp duty. Providing you sell your existing property, you already have a deposit.

You put your house up for sale, person a makes an offer of 100k, their solicitor sends deposit to your solicitor when you exchange contracts. You tell your solicitor that both the sale of your 100k property and the purchase of the 230k property need to happen on the same day.

The deposit you are given for the sale of your property is then used as part of the deposit for your next house, often it is the only amount sent(I.e. No additional cash from your savings). However, if for some reason you don't complete, you are still liable for the rest of the 10% deposit (plus any other costs).

It is what is meant by being 'in a chain' each person is dependant on the sale of their existing house in order to buy the next.

Many people are in the same situation. If you don't have any savings at all, you will need to have some before you move, you will need to find money to cover things like, removals, stamp duty, solicitors fees and searches. These can add up quite a bit. If you have equity in your current property you COULD use some of that equity towards those costs, but things like removals and searches need to be paid before you complete and have access to the equity in your property.

In addition if you use money from your equity, you will need to have a larger mortgage and this will affect your loan to value. Effectively, you will be borrowing those costs by way of a bigger mortgage. This would be a much more expensive way to obtain those funds than saving it up.

Hope this helps

Pink

amnblog

Radiator

Is the point here that the builder wants you to put down 10% cash now to secure the new property?

That's is the only way I can make sense of your post.

Otherwise, if you are selling your current property you do not have a problem.

If you are keeping it, your need to raise the deposit on the new property in cash in some form, via savings, or by remortgaging the current home.

Radiatormannw

Pinkcheshire cat & Amnblog
Thank you as you have given me the information I was hoping for.

BUT

I have spoken to Nationwide, John Charcol, Santander and have been told I require a 10% minimum deposit for a mortgage (never mind the 5%, 10% or whatever for the deposit on the property) as that is the lending criteria, no matter what is said on here that is what I am being told and all I want to know is there a way around it? Now it looks like there is.

I have my house up for sale, its worth 100k, I dont want to sell and move to rented accom for 1-3 months then look for a mortgage I just want to get in a chain and move after selling my house but I physically do not have the 23k required by the mortgage lenders as a deposit / commitment / contibution towards a mortgage.

If there is a mortgage consultant out there who can getr me a mortgage and enable me to move by just putting say 10k down then you can have my business

amnblog

You have been misinformed Radiator.

If you are selling and buying at the same time, we could do this all day long.

Any sensible broker could.

amnblog

The inherent value you have in your current property, serves as the deposit for the new property.

Radiatormannw

ACG
As you are a mortgage adviser and in Manchester would you like my business and get me the mortgage I am seeking?

I am in North Manchester and can meet anytime to suit you

Radiatormannw

Is there a mortgage broker / adviser out there who wants my business and can get me a mortgage

amnblog

many of us could but we are not allowed to approach you for it on here Radiator.