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

Thrugelmir

Radiatormannw wrote: »

This cannot be correct can it?

You'll need this when you exchange contracts to purchase the property. Your vendor may accept less than 10%. Remember your solicitor will receive will 10% of the value of your property, i.e. £10,000. So you only need to find £13,000 to fund the difference.

DevCoder

Sell your house, rent for the minimum term you can and become a low LTV buyer with no chain on your side...

Radiatormannw

Thanks for the reply, but unfortunately I am not prepared to sell my house then rent and get mortgage lenders deny me a mortgage and trap me into renting forever and a day.

They change the rules to suit themselves and despite being a good lend on paper when it comes to the crunch these guys can change their minds

Radiatormannw

Unfortunately its the mortgage companies who insist on the 10% of the purchase price deposit, that's the regulations in place now. It has nothing to do with the vendor

bouicca21

Maybe I am just tired, but I don't understand. You sell your house for £100k; you borrow £130k to add to the £100k; you buy for £230k. How is your £100k not regarded as a deposit by the lender?

If the 10% you talk of is the deposit required at exchange, and you don't have £23k, then you just negotiate it down.

Thrugelmir

Radiatormannw wrote: »

It has nothing to do with the vendor

It does. As in the event you fail to complete the purchase the deposit will be forfeited. House purchase has always required deposits of ( normally )10%.

Radiatormannw

Maybe I am not explaining this clearly, but I have a house I want to sell and its worth approx 100k, its all paid off and mortgage free.

I have seen a house I want to buy and its 230k, therefore I want to borrow 130k

However the building societies (and I spoke to a few believe me) all want a deposit equal too 10% minimum of the purchase price of the new house ie £23,000. I dont have £23,000 in cash to hand or ever will have, but I have £100,000 in a house I own outright. Yet I still cant move without this 10% deposit that the lenders (all lenders want the same) require and is a requirement that was brought in to play in April this year

I am looking for answers of how to get around this some way.

This deposit is nothing to do with the vendor or solicitor its what the building societies are saying you need.

Is it any wonder the housing market is in a mess

Radiatormannw

So from what I am hearing now I also need another 10% deposit for the vendor too

Bliss77

Similar to us I think...

We are selling our house and will have just over £100k in equity. We have sold our house and our buyers deposit at exchange will travel up the chain to be our deposit on the house we are buying.

The house we are buying is more expensive that the house we are selling so the 10% deposit that our buyer provides will not be enough for the 10% deposit on our new house. however, our solicitors are negotiating a smaller deposit of 5%

HTHs

Mrs_Imp

Could you release some of the equity from your house? Or is that not possible?