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How to sell first home and pay for new home? Timeline?

Hi all,


This will probably come across as a very stupid question but I am struggling to understand the process of selling your first home to buy your next.

I bought my first house 8 months ago for 175k, with 5% deposit. Installed new kitchen had all walls stripped decorated etc. Hoping to sell it for 195k (according to local sale prices)

I would like to buy a house for between 230-260k. So, for example, if I purchase a house for 250k and I receive 195k for my house. How does it all work with paying for new? I would want to put down 10%. So 25k. I have 160k ish left on mortgage. If my buyer only gave me 5% (9750) how would I then afford the 25k for new place? After my mortgage has been paid and fees I should have 28k ish.

My mortgage is portable so no fees for doing this. I don't want to start the process and realise I cant afford it?

I will have around 4k in savings in next 2 months. So not enough to make 25k.

I hope you can understand all my waffling lol!

Huge thanks in advance.
«1

Comments

  • Think I have discovered that I will use the deposit I receive from my buyer as exchange deposit for my new place. This will probably not be the 10%. And hopefully the seller and solicitor is happy with that. And that I can't really use the equity?
  • mrschaucer
    mrschaucer Posts: 953 Forumite
    Part of the Furniture 500 Posts Name Dropper
    Think I have discovered that I will use the deposit I receive from my buyer as exchange deposit for my new place. This will probably not be the 10%. And hopefully the seller and solicitor is happy with that. And that I can't really use the equity?

    Why do you think your seller should be happy with less than 10% deposit when that is the "standard" contractual amount? He's got to find 10% as deposit for HIS next house purchase, after all. It's up to you to make up the shortfall between the money you get from your purchaser to pass up to your seller on exchange - sometimes people do agree less, but don't bank on it.
    It's a conversation you need to have very early in the process if you want the seller to accept less.
  • I think they may be happy with that because that's what I negotiated when buying my first property and seller agreed it was fine. Actually, all my friends who have bought recently all agreed on 5% exchange deposit. But I would of course negotiate that early on.
  • G_M
    G_M Posts: 51,977 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ....

    I bought my first house 8 months ago for 175k, with 5% deposit.
    so you have a mortgage of just under £166,250

    Installed new kitchen had all walls stripped decorated etc. Hoping to sell it for 195k (according to local sale prices)
    so you have equity of around £8,750

    ....So, for example, if I purchase a house for 250k and I receive 195k for my house. How does it all work with paying for new?
    I would want to put down 10%. So 25k.

    So you need to find another £16,250 + costs in cash.

    I have 160k ish left on mortgage.
    seems unlikely after just 8 months..... have you checked?

    If my buyer only gave me 5% (9750) how would I then afford the 25k for new place? After my mortgage has been paid and fees I should have 28k ish.
    The issue of the Exchange deposit is minor- it is common for the deposit to be passed up the chain by agrement.

    You will also need to increase your mortgage to cover the shortfall:
    250,000 - 166,250 (ported mortgage) = £83,750 - 25,000 (cash) = £58,750

    My mortgage is portable so no fees for doing this. I don't want to start the process and realise I cant afford it? why the '?'? That looks like a sensible statement, not a question.

    I will have around 4k in savings in next 2 months. So not enough to make 25k.
    so you need to find

    * £21K cash and
    * £58,750 increased mortgage
    Of course my maths may be wrong.....
  • G_M wrote: »
    Of course my maths may be wrong.....

    Thanks for your reply.

    How is my equity not 30k with a sale price of 195k? I have spent money on kitchen and house but I had that money saved separately. That would be my 10%. I don't understand?

    You are correct my mortgage is probably more than that I have not checked yet.

    Yes I know my mortgage will have to increase.
  • goodwithsaving
    goodwithsaving Posts: 1,314 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Your mortgage is portable if it all ties up. I once planned to port but had to break the chain and so lost £5000. I needed to sell and could afford to lose it even having got that far into solicitors fees, you need to consider that scenario.

    £4k in savings isn't very much when it comes to house moving and associated costs, it gets swallowed up very quickly.
    Why would you want to increase your mortgage a mere 8 months after acquiring it? Do you feel comfortable with the increased monthly payments? All those sorts of questions to consider....
  • Your mortgage is portable if it all ties up. I once planned to port but had to break the chain and so lost £5000. I needed to sell and could afford to lose it even having got that far into solicitors fees, you need to consider that scenario.

    Agreed! .

    £4k in savings isn't very much when it comes to house moving and associated costs, it gets swallowed up very quickly.
    Why would you want to increase your mortgage a mere 8 months after acquiring it? Do you feel comfortable with the increased monthly payments? All those sorts of questions to consider....

    My current mortgage is 14% of my net income. I can afford much more according to my mortgage advisor. My current house is very cramped and we bought cheap to do up as a start on the ladder.

    Thanks
  • Flugelhorn
    Flugelhorn Posts: 7,451 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    I think if I was looking at properties and I saw one that was bought 8 months ago, I wouldn't expect to pay over 10% more - even with a new kitchen. Would also be wary of someone moving so soon!
  • I will more than likely wait until next year anyway with the September budget and Christmas. Most houses in my village are snapped within days. Definite sellers market here. We bought this 48 hours after it went on rightmove!

    10% more is 192,500. Would be happy with that :)
  • VincentVincent
    VincentVincent Posts: 99 Forumite
    10 Posts
    edited 3 August 2019 at 10:16PM
    Thanks for your reply.

    How is my equity not 30k with a sale price of 195k? I have spent money on kitchen and house but I had that money saved separately. That would be my 10%. I don't understand?

    You are correct my mortgage is probably more than that I have not checked yet.

    Yes I know my mortgage will have to increase.

    If you have £160k left on the mortgage and sell the home for £195k, then you'll have £35k equity. That difference between outstanding mortgage and sale value is what equity is.

    I have no idea where this £8,750 equity and needing to find £16k cash idea is coming from.
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