Mortgage-free house move

kolonuk

Hi - first time poster, but have been a regular visitor for years, and have really appreciated the advice everybody gives here.

I'm just looking for some advice or gotchas to avoid. Essentially, I own/live in a mortgage-free flat, and my wife and I are looking to move to a real house. However, we have some savings, but not much (since paying it off we've been lazy savers!). I'm aware of stamp duty, and solicitors fees, agent fees, etc relating to buying a house, but what about getting a mortgage?

As I already own a fully-paid off property, do I use that as the "deposit", or do I need another 10-15k to get another mortgage, then sell the flat and pay off a chunk of the new mortgage? Should I "re-mortgage" now to get some up-front funds for a deposit? How does this all work, and whats best?

Thanks in advance - I really have no clue!

xylophone

https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/how-to-buy-and-sell-at-the-same-time/

mundibananas

You use your current property as your deposit. When it comes to exchanging contracts - your buyer will pay their deposit (or whatever percentage agreed) to you, and you in turn pay this on the property you are purchasing. On completion, your buyer transfers the remaining funds to you - which you in turn use as a payment towards your new property - topped up with any mortgage you require as the balance.

You will find it useful to have savings to pay for the stamp duty, fees and moving costs.

I hope this helps !

pinkteapot

Bit more detail to add to the above: As standard the deposit on exchange is 10%. If you're buying a more expensive property than you're selling, you normally need to 'top up' your buyer's deposit.

For example, you sell for £100k so on exchange your solicitor gets a £10k deposit from your buyer. You're buying for £150k so need to pay a £15k deposit. You'd transfer £5k to your solicitor so they have £15k in total to pass up the chain.

However... your solicitor can ask your seller if they'll accept a lower deposit. Pretty standard as people often don't have the cash lying around to do this top-up. Just let your solicitor know while they're doing all the paperwork that they'll need to ask your buyer to accept whatever deposit you get on your place.