Simultaneously buying and selling confusion - advice please

[Deleted User]

Hi folks 
I'd be grateful for your thoughts please?
I bought a flat approx 3 years ago in a town I had never been too because everyone told me it was a nice place to live and I was priced out of the town I was renting in and loved. While I love my flat I hate the town and everything about it, plus as it is around 80 mins by train from where I used to live I feel cut off from my friends. I am desperate to move and thanks to some wage increases over the last few years and some equity in my flat I have a slightly better budget. Not enough to return to where I used to be but 20-30 mins away.

This is the second property I have bought but on each occasion I have gone to/from rented so trying to get my head round it?!

I understand I need to have mine in the market but then what if I get a buyer and cant find somewhere to buy? 
Also apart from a small amount of savings that will cover searches and surveys etc I dont have a large amount saved and I'm relying on using the equity to pay the deposit. I would be selling me current flat for around 125k (Mort currently 90k) and buying at around 150k so how would the deposit work? Would I  need to be able to make up the difference?

My instinct is to sell and rent while I settle into the new town and look for somewhere. That way I have the deposit ready to go - is that crazy? 

Sorry but really confused. Thanks

quotememiserable

I usually look around first and make sure there are some properties in price range that I like, then list the one I have for sale. This is what creates chains as we wait for everyone to find houses and be ready to go. Can take a while.
Regarding the deposit, you receive one from the buyer of your flat and use that to pass along as your own deposit. Maybe you need to add a bit on.

AdrianC

Purplepenguin70 said:

I bought a flat approx 3 years ago...
I am desperate to move and ... I have a slightly better budget.

I understand I need to have mine in the market but then what if I get a buyer and cant find somewhere to buy?

Then you can break the chain and rent instead.

It's always difficult to know whether to prioritise finding a buyer for your old place or finding the new place first. It depends largely on the state of the market - in a seller's market like now, you simply won't be taken seriously in your searching if you aren't proceedable, which means an accepted offer if you're looking to be in a chain.

Also apart from a small amount of savings that will cover searches and surveys etc I dont have a large amount saved and I'm relying on using the equity to pay the deposit. I would be selling me current flat for around 125k (Mort currently 90k) and buying at around 150k so how would the deposit work?

You have £35k equity.
Call it £5k for fees. SDLT is minimal - £500 from October on, £0 before.
So you'll be looking at about £120k mortgage, 80% LtV. Shouldn't be an issue.

Security deposits at exchange on chains tend to simply pass up the chain - so when your buyer exchanges and their deposit is passed over, you can then exchange and pass it up the chain.

Chances are your buyer will be FTB, so no downward chain. So they would typically be paying 10%, £12.5k, in. You pass that up, and that's only 8.3%. No real issue, perfectly normal.

My instinct is to sell and rent while I settle into the new town and look for somewhere.

Given your experiences of relocating last time, that may well be a very sensible move indeed.

MovingForwards

I would also suggest selling and renting, just in case you don't like the new area either. Also do a lot of research to see what it has to offer and whether it meets what you're after, not only being closer to friends but amenities too. Look up to see frequency and costs of buses / trains and the first / last one. Check opening ours of shops, walking distances and anything else you can. Internet searches, maps and other online information makes it so much easier to find the right area.

saajan_12

Purplepenguin70 said:

Hi folks 
I'd be grateful for your thoughts please?
I bought a flat approx 3 years ago in a town I had never been too because everyone told me it was a nice place to live and I was priced out of the town I was renting in and loved. While I love my flat I hate the town and everything about it, plus as it is around 80 mins by train from where I used to live I feel cut off from my friends. I am desperate to move and thanks to some wage increases over the last few years and some equity in my flat I have a slightly better budget. Not enough to return to where I used to be but 20-30 mins away.

This is the second property I have bought but on each occasion I have gone to/from rented so trying to get my head round it?!

I understand I need to have mine in the market but then what if I get a buyer and cant find somewhere to buy? - do you think it'll be particularly difficult to find a buy, eg if you have extra requirements? If not, usually people form a chain and its expected to take a bit of time for the chain to complete (ie for you to find a house, your seller to find a house, their seller to find a house, their seller etc etc until someone isn't moving out. If it takes super long, you could break the chain and move into rented, then buy later. 

Also apart from a small amount of savings that will cover searches and surveys etc I dont have a large amount saved and I'm relying on using the equity to pay the deposit. I would be selling me current flat for around 125k (Mort currently 90k) and buying at around 150k so how would the deposit work? Would I  need to be able to make up the difference? - For the 10% deposit upon exchange, your sol would receive 12.5k from your buyer, and pass that on to your seller as a 8.3% exchange deposit on your purchase. This is usually just accepted, but they could in theory ask you top up the 2.5k to make it 10%. 
For the deposit as in equity, you currently have 35k in current house. You'd either need to get a new mortgage for 115k or top up with savings (after paying fees). 
 
My instinct is to sell and rent while I settle into the new town and look for somewhere. That way I have the deposit ready to go - is that crazy? - deposit being tied up in the property isn't usually an issue. The greater benefit of renting is (a) being able to experience the new area to be sure you like it and (b) being chain free, so reducing delays. However it might be slightly more expensive in having to move house twice and pay rent (instead of mortgage). 

Sorry but really confused. Thanks

Relax, shouldn't be too stressful.
The first question is can you afford it - ie can you get a mortgage for 115k -> with your 35k equity and assuming your savings cover fees, that makes up the 150k purchase price. If not, do you have savings to top up the difference?

Second question is how you do it - in a chain is the normal way, people will expect it takes a bit of time to find a purchase (though you should already be keeping an eye, know what you want, whether its realistic etc). 
Alternative is to sell, rent, and then buy, - being chain free might give you a small advantage (not always) but more importantly you get to experience the new town and confirm you want to live there.
Swings and roundabouts, so neither one will be terrible.