Any solicitors dealt with this issue before- buying parents home?

jennifernil

Is a "deposit" compulsory in England?
Having bought and sold a few properties in Scotland, we have never had to pay 10% or whatever up front, just send the difference between the mortgage and the purchase price to our solicitor so it was there by the day the property actually changed hands, assuming a more expensive property was being purchased.

If we were downsizing I would expect the surplus would be sent to us by our solicitor.
It seems to operate on trust between solicitors.
In this case would the house the parents are getting not be the "deposit"?

p00hsticks

jennifernil said:

Is a "deposit" compulsory in England?
Having bought and sold a few properties in Scotland, we have never had to pay 10% or whatever up front, just send the difference between the mortgage and the purchase price to our solicitor so it was there by the day the property actually changed hands, assuming a more expensive property was being purchased.

Isn't the OP's problem though that they won't have that 'difference between the mortgage and the purchase price there by the day the property actually changes hands' because it's going to come from releasing the equity they have in the current house ? And that won't be available until the parents have the money to buy it, which is going to come from......   and round we go in circles.....

davidmcn

p00hsticks said:

jennifernil said:

Is a "deposit" compulsory in England?
Having bought and sold a few properties in Scotland, we have never had to pay 10% or whatever up front, just send the difference between the mortgage and the purchase price to our solicitor so it was there by the day the property actually changed hands, assuming a more expensive property was being purchased.

Isn't the OP's problem though that they won't have that 'difference between the mortgage and the purchase price there by the day the property actually changes hands' because it's going to come from releasing the equity they have in the current house ? And that won't be available until the parents have the money to buy it, which is going to come from......   and round we go in circles.....

That's no different from any other chain though. Nobody "goes first", they go simultaneously.

GDB2222

jennifernil said:

Is a "deposit" compulsory in England?
Having bought and sold a few properties in Scotland, we have never had to pay 10% or whatever up front, just send the difference between the mortgage and the purchase price to our solicitor so it was there by the day the property actually changed hands, assuming a more expensive property was being purchased.

If we were downsizing I would expect the surplus would be sent to us by our solicitor.
It seems to operate on trust between solicitors.
In this case would the house the parents are getting not be the "deposit"?

There’s no need for a contractual deposit unless the parties want one. In the current case, there’s no reason why they would bother.

 

ThePants999

Another vote for "clueless solicitor". A house swap, even where one is of higher value than the other, should not be difficult!

Leonberger

Thank you to you all.

Im purchasing the higher value property with a mortgage- 90% LTV with the 10% coming from equity in my house.

Parents won’t need a mortgage and are buying mine cash so no deposit but I need them to buy mine to release the deposit funding. 

xylophone

But essentially it is a case of John has a  mansion worth £1000 and  Mary has a  cottage  next door worth £600 - he'll swap his mansion for her cottage and £400?
Mary doesn't have the cash so her bank agrees to lend her the money at 5% and a charge on the mansion.
John stands at the  fence and with his right hand passes over his deeds to Mary's solicitor who simultaneously hands over the bank's  £400 to John  with Mary's deeds and takes custody of  John's deeds on behalf of the bank?
https://www.lovemoney.com/news/86175/house-swaps-what-you-need-to-know

ThePants999

Exactly. Your parents aren't buying your house in cash, they're buying it with a house. You're buying theirs partly with a house, partly with cash and partly with a mortgage. You get your mortgage, and on completion, your solicitor pays your cash and mortgage to theirs, and they swap title deeds. (Sort of, that doesn't actually happen any more.)