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Part exchange help...deposit explained

elsamay15
Posts: 2 Newbie

Hello everyone
Hope you can help - please excuse my ignorance I am completely new to the property world!
My boyfriend & I bought our first house (Taylor Wimpey new build) in 2018. We love the house and the area, but are now looking to the future as we bought a 2 bed and it’s been great but definitely not a “forever home”. TW are planning to build near us in 2022/23, which would be ideal timing, so we are trying to plan out what we need to aim for to be able to move. We have both attained higher salaries so will be able to (hopefully) get a mortgage to allow us to buy a house up to about £300,000 (with a 10% deposit).
Obviously we don’t know what the housing market will be like at the time or what Taylor Wimpey would offer us for part exchange but we currently have about £30,000 in equity in our house due to what it’s worth and what we’ve paid off. (Worth £175k, about £145k outstanding on mortgage)
My question is - how does part exchange actually work in terms of deposit etc? Would the equity in our house be able to be used for the deposit? Or would we still have to physically have a £30k deposit in our savings??
Thanks
Hope you can help - please excuse my ignorance I am completely new to the property world!
My boyfriend & I bought our first house (Taylor Wimpey new build) in 2018. We love the house and the area, but are now looking to the future as we bought a 2 bed and it’s been great but definitely not a “forever home”. TW are planning to build near us in 2022/23, which would be ideal timing, so we are trying to plan out what we need to aim for to be able to move. We have both attained higher salaries so will be able to (hopefully) get a mortgage to allow us to buy a house up to about £300,000 (with a 10% deposit).
Obviously we don’t know what the housing market will be like at the time or what Taylor Wimpey would offer us for part exchange but we currently have about £30,000 in equity in our house due to what it’s worth and what we’ve paid off. (Worth £175k, about £145k outstanding on mortgage)
My question is - how does part exchange actually work in terms of deposit etc? Would the equity in our house be able to be used for the deposit? Or would we still have to physically have a £30k deposit in our savings??
Thanks
0
Comments
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We part exchanged last year. The equity in your current home is used as the deposit for your new home.
Beware though that if your current home is worth £175k on the open market then that is not what they will offer you for it.
They offered us about 10% under what we could have sold our home for on the open market (£90k for a £100k property) but when we weighed up the other incentives we got which included stamp duty paid, £10k deposit contribution, free flooring throughout, legal fees paid and moving costs contribution we decided that the deal was well worth taking. Plus we had no chain and from reserving the plot to moving in was a little under four weeks due to the plot we wanted being complete and ready to move into.0 -
RelievedSheff said:We part exchanged last year. The equity in your current home is used as the deposit for your new home.
Beware though that if your current home is worth £175k on the open market then that is not what they will offer you for it.
They offered us about 10% under what we could have sold our home for on the open market (£90k for a £100k property) but when we weighed up the other incentives we got which included stamp duty paid, £10k deposit contribution, free flooring throughout, legal fees paid and moving costs contribution we decided that the deal was well worth taking. Plus we had no chain and from reserving the plot to moving in was a little under four weeks due to the plot we wanted being complete and ready to move into.
Thanks for your reply, that’s helped a lot!
Yeah we’re aware they will probably offer us less, it was just as an example if we had £30,000 in it would that be able to be our deposit.
So in that example....would TW basically buy our house at £175k...so we would pay £145k mortgage off and get £30k out of it and use that towards a deposit for £300k house so get a mortgage for £270,000
Or does it work in the way the new house costs £300k, we use our house of 175k put towards it so, £125k remaining, so we get a mortgage on that amount?
Apologies it may sound so silly but it’s just so we know to make realistic plans - trying to be sensible!0 -
If TW give you £175k for your property you use that to pay off your existing mortgage which then gives you £30k as a deposit on the new property. You then need a £270k mortgage on the next house.
The solicitors sort all of the money out and transfering it to the relevant parties.
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