basic question about the property chain

gsamsa

Hi. I'm currently buying my first property using a Lifetime tracker with Woolwich which I think it is quite good. I've made a deposit of 37% and I'm planning to make some payments every few months in order to pay less interest.

My question is: should I leave a lot of cash available for a deposit if I want to buy a new property selling at the same time my first property? Can I use part of the equity of my first property as a deposit for the new (second) property? According to the mortgage advicer (expert? :huh: ) from Barclays the only way of getting a new mortgage it is selling my first property, renting and then buying the new property which it doen't make sense to me.

One more question, what are the problems of not having much cash available? (I can always ask my parents to lend me some money in case of an emergency). In that way, I can save hundred of pounds in interest.

Thanks

apk1

I think one of you have got your wires crossed here, I think what you are saying is : when you wish to move from the property you are currently buying will you need cash for the deposit ? If so then normally when you sell yours, the deposit you recieve will be passed up the chain, so you theoretically should not need any cash.

gsamsa

Yes, I got confussed. That's exactly what I was asking. But what I don't have clear yet is this:

During the selling/buying chain process, I need to send the deposit to my solicitor before the exchange of the contracts, is that right? Then, as I haven't sold my property at that point, I cann't do that step.

How's this solved?

Sorry if my questions are very basic.

Thanks a lot for the help.

sdooley

gsamsa wrote: »

Yes, I got confussed. That's exactly what I was asking. But what I don't have clear yet is this:

During the selling/buying chain process, I need to send the deposit to my solicitor before the exchange of the contracts, is that right? Then, as I haven't sold my property at that point, I cann't do that step.

How's this solved?

Sorry if my questions are very basic.

Thanks a lot for the help.

It works like this:

Say you are selling for £100,000 and buying for £150,000, both standard 10% deposit.

On your exchange of contracts on the sale, you receive £10,000 deposit, which your solicitor can pass to your vendor's solicitor under the standard terms, together with £5,000 from you.

This is why chains only work in this way if everyone is represented by a solicitor or licensed conveyancer as your money can end up four or five links up the chain, but undertakings prevent anyone just withdrawing the money and spening it!