Second time buyer - can anyone answer my stupid questions?

Panixs23

Hi all.

Sorry if these questions seem stupid but im having a hard time understanding all this.
My wife an I currently have a mortgage with £82k left to pay on our first property that we purchased for £110k (11k deposit £99k mortgage).
We are looking to move this summer and have had the house valued at £200k.

Now where im not getting this at all is we have only a couple of thousand in savings and this would very likley be taken up in fees, so when we go to the bank to get AIP and mortgage offer for the new property do they take the potential £100k in the sale into account? using part of that as the deposit for the new mortgage or would we be better off to sell and move into parents/sort term rental and then apply as "first timers" again?

im really sorry if this is a very stupid question but hoping someone can help me out.

kayfaz

Yes, you would therefore be in a "chain" and you complete both transactions (selling yours and buying new one) on the same day.

trailingspouse

You wouldn't be considered as first time buyers if you sold before buying. You might be cash buyers, or buyers with no chain (all good things) but not first time buyers.

Xyzzy

Yes, you can use your equity for your deposit. Your solicitor handles all this on moving/completion day and ensures the equity from the property you've just sold that day goes to the deposit on your new house purchase. You can also use some equity towards fees, solicitors fees and estate agents fees, should you need to.

twigpig

I'm about to be a 2nd time buyer myself.....

Assuming that you sell at £200k, you have £118k equity.

So, let's say that you find a new house at 218k, you're not applying for a mortgage for 218k, you'd be applying for a mortgage at of £100k using your equity of £118k to make it the difference. Then as your conveyancer completes the sale, he gets the money from your buyer/their lender of £200k, he pays your remaining mortgage and then the £118k excess goes to the person you bought from along with the borrowed £100k money from your new mortgage provider. That makes the £218k that you bought your new house for....

Make sense?