Selling house, buying new one... 10% deposit?

jezthomp

Hello, i wonder if someone could help?

We're in the process of selling our house and buying a new one.
We've accepted an offer on our house and our offer on another house has been accepted (they have already moved out as well, handy)
Mortgage is all sorted, they are happy once confirmed our sale deposit etc.

One thing i'm not sure about is a 10% despite our solicitor has briefly mentioned?

Do we have to stump up 10% of the house we're buying for 255k?

I'm confused by this our mortgage minus our sale deposit is for 255 not 255 minus 10% i'm not even sure i have 10% of that much without borrowing it from family.

Don't people buy houses and only use their current house towards it all the time, how do people afford this 10% deposit? Is it the law like stamp duty or something else.

Can it just be incorporated into the mortgage so i just get a mortgage for 255 - 10%.

As you can tell i'm a little confused especially as its only 'might' be needed?

Thank you for any opinions

Bossypants

Generally the deposit will be 'passed up the chain'. With any chain, at the bottom there will be a buyer with nothing to sell. They will have to provide their deposit in cash to the their vendor, who will us that cash as deposit for their vendor, who will pass it onto theirs, and so forth until it reaches the end of the chain, i.e. the person who is selling but not buying.

If the value of the property at the bottom of the chain is significantly lower than that of the top, it may be that it is lower than 10% by the time it gets that far. In that case, it is usually possible to negotiate a lower than 10% deposit (10% is not a legal requirement, it's just the industry standard).

G_M

The 10% deposit (or a lower amount if your seller agrees) is paid at Exchange of Contracts.

Your mortgage lender will not release your mortgage till Completion.

So you either have to pay the 10% :

* from your own savings, or
* from the deposit you receive from your buyer (which may be a different amount)

or a combination of the two.

This has no relationship to the % you are borrowing.

jezthomp

G_M wrote: »

The 10% deposit (or a lower amount if your seller agrees) is paid at Exchange of Contracts.

Your mortgage lender will not release your mortgage till Completion.

So you either have to pay the 10% :

* from your own savings, or
* from the deposit you receive from your buyer (which may be a different amount)

or a combination of the two.

This has no relationship to the % you are borrowing.

Thank you guys.

I see so it's separate to the mortgage?
If we do have to pay for it ourself separately surly that means we have a mortgage for more that we need. i/e 255k when really its minus 10% of 255? How will that all work in relation to it be sorted all out?

poorweelass

The way to avoid paying it upfront is to exchange and complete on the same day

p00hsticks

jezthomp wrote: »

Thank you guys.

I see so it's separate to the mortgage?
If we do have to pay for it ourself separately surly that means we have a mortgage for more that we need. i/e 255k when really its minus 10% of 255? How will that all work in relation to it be sorted all out?

You said that your 'mortgage minus your sale deposit' is 255k.

I'm not sure what you mean by your sale deposit but basically if your mortgage is for more than 90% of the house value and you've paid a deposit of 10% at exchange, you'd get the extra back on completion.

If you've got a 90% mortgage and a 10% cash deposit saved, then the cash can also act as your deposit at exchange.

As poorweelass has said - you can avoid having to pay a deposit by exchanging and competing on the same day or, if you don't want to do that, (as it means there will be uncertainty about your moving date right until the last minute) you can ask your solicitor to see if he can get the seller to agree to a lower deposit amount.

G_M

jezthomp wrote: »

Thank you guys.

I see so it's separate to the mortgage?
If we do have to pay for it ourself separately surly that means we have a mortgage for more that we need. i/e 255k when really its minus 10% of 255? How will that all work in relation to it be sorted all out?

You pay 10% on exchange, using either your own cash and/or whatever deposit you receive from your own sale)

At Completion you pay the remaining 90%, using the mortgage you've arranged and any additional cash needed to make up the 90% due.

If your mortgage is more than the outstanding 90% then you'll have a bit of cash left over which will either:

* be used o pay SDLT or
* the solicitor's/estate agent's bills or
* be returned to you

All this will be accounted for by your solicitor who will draw up a 'Completion Statement showing what money he has received(from you, your buyer, your lender etc) and what money he has paid out (to your seller, HMRC, himself etc ).