How much cash will I need?

VultureDodger

I wonder if you wonderfully knowledgeable people can help me, please?

We've got our eyes on a new build house (which I'm sure that some of you eagle-eyed viewers may have noticed from some of my other posts around the board). It's been 17 years since we bought our first and current home, which we bought directly from friends of ours so I am completely out of the loop with the whole process, so I apologise in advance for my pretty stupid questions...

Can anyone tell me, roughly how much money I will need up front for the sale of this house and purchase of our new one. We have equity in our current home; I'm assuming that we can use this as the deposit for our new home - is this right? I also think I'm pretty safe to say that the stamp duty, solicitors/conveyancer's fees and estate agency fees don't need paying until the sale has gone through. Will I need cash for anything else before our equity is released? If so, roughly how much do you think I will need and what for? I want to make sure that I have all my ducks in a row before we instruct an estate agent, as we don't want any nasty financial surprises!

Huge thanks :beer:

BlaEm

Although solicitor fees will be payable on completion, you'll likely need to pay for searches etc up front - budget a couple of hundred for these (the Local Authority search is the most expensive!)

If the property you're selling has a management company (e.g. if it's leasehold), you'll also need to pay for an information pack from them to provide your buyer - that could be another few hundred. There's also always the possibility of needing indemnity policies (e.g if you don't have certain guarantees) which will need to be in place before completion.

If you have a survey, other than a basic valuation survey from your mortgage lender, this will again need to be paid upfront and could be up to £1k for a full structural survey (plus anything else you may need - e.g. if they recommend getting someone to look at electrics, damp etc etc). Obviously depends on size, age and location of the property you're buying - if its a New Build you'd expect everything to be in order!

VultureDodger

Thank you so much, BlaEm, I really appreciate you taking the time to reply - you're a superstar!

Our property is freehold, so we don't need to worry about an information pack. Do buyers of new builds usually get full surveys done?

It's shocking how much solicitors charge for searches. I've just looked at how much they cost from my local council and they come to around £60 and I used to work at the Land Registry, doing searches and office copies, which will come to no more than about 20 quid, and yet we'll be charged hundreds of pounds for these. Sigh... Oh well. I guess we pay for their expertise in reading them and spotting any problems.

Do we need to pay for anything upfront for the sale of our house?

Again, thank you so much for your help

booksurr

if the property you are buying costs more than the one you are selling remember your deposit is payable on exchange and passes up the chain at that point.

obviously you will get some cash yourself from your own purchaser's deposit he pays when he exchanges with you, but you may (will) need to top that up to meet the size of your own required deposit to pass up to your vendor

Penelope_Penguin

VultureDodger wrote: »

?Do we need to pay for anything upfront for the sale of our house?

Again, thank you so much for your help

You will need to pay for an EPC. We also paid for "professional photos". This isn't strictly necessary, as photos are part of the EA package, but having seen some shocking photos on the "Take a Look at This" thread, I'd strongly recommend it. Cost us about £200 all in.

AnotherJoe

VultureDodger wrote: »

Can anyone tell me, roughly how much money I will need up front for the sale of this house and purchase of our new one. We have equity in our current home; I'm assuming that we can use this as the deposit for our new home - is this right? No (see below) that equity just ends up as equity in your new home.

I also think I'm pretty safe to say that the stamp duty, solicitors/conveyancer's fees and estate agency fees don't need paying until the sale has gone through. Correct

Will I need cash for anything else before our equity is released? Your equity is not released (unless the house you are buying costs less than the one you are selling. It will move to the new new house.

If so, roughly how much do you think I will need and what for? Up to maybe a grand for mortgage valuation / application fees and incidentals.

Plus the builder of a new home will often want some sort of "commitment fee" which may be called a deposit but isn't in the sense you mention.This is to "secure the plot/house". It will generally be non refundable if you back out but is eventually counted towards the purchase.
You'll have to ask them what it is, and it may be negotiable. Less negotiable with a big chain, more so a local builder. It might be £500 for example. I want to make sure that I have all my ducks in a row before we instruct an estate agent, as we don't want any nasty financial surprises!

Here's the "see below" bit re deposit.

When you buy you 'traditionally' put 10% up as a deposit at exchange.This needs to be paid to your solicitor who holds it in a special account. Rather than everyone put 10% in cash in, what often happens is that you in effect borrow the 10% deposit you got from your buyer and pass it up the chain to your seller and so on.
Sometimes you can negotiate the %. Lets say your house £500k new house £1M. Your buyers pass over £50k, you need to pass a £100k. So you need £50k. You may be able to negotiate 5% with your seller in which case you can use your buyers £50k. If your sellers want more but they are OK with (say) 7.5% then you'll need £25k.

VultureDodger

Thank you all SO much for taking the time to reply - You're all awesome (and no doubt incredibly good looking! lol).

I've started looking at local estate agents, spoken to a couple over the phone and will make appointments shortly. One of them has an offer on at the moment where we get free EPC testing and professional photos and another has a cheaper base rate and you can purchase a package that gives you all kinds of upgraded stuff and a video tour thingymajig. I'll figure out which is best for us when they come round and look at the house.

We're going to use the Help To Buy scheme and will put some of the equity, or our received deposit towards our home towards the new build home we want to buy.

I'll make sure that we've got some money set aside for the searches etc.

Thrugelmir

VultureDodger wrote: »

It's shocking how much solicitors charge for searches. I've just looked at how much they cost from my local council and they come to around £60 and I used to work at the Land Registry, doing searches and office copies, which will come to no more than about 20 quid, and yet we'll be charged hundreds of pounds for these. Sigh... Oh well. I guess we pay for their expertise in reading them and spotting any problems.

Solicitors charge the cost of searches, nothing more. Suggest you read them too. As you've viewed the property the solicitor hasn't.