How does it work when using sale of house as deposit?

TractorFactor

We're using part of the sale of our house as a deposit (£100k) for our new house.

Does this mean we have to exchange and complete on the same day?

We won't have the funds for the deposit until we get the funds for this house.

FlorayG

Funds are released to all parties when you complete, so you can exchange without actually having the money in the bank

MikeJXE

I have moved 10 times in my life time and never once had to provide a 10% deposit 

eddddy

So you are selling your old house and buying your new house.

Therefore, you have to do both of the following:

• Exchange contracts on your sale and your purchase on the same day

• Complete on your sale and purchase on the same day

But you can have any length of gap between exchanging contracts and completing.

saajan_12

TractorFactor said:

We're using part of the sale of our house as a deposit (£100k) for our new house.

Does this mean we have to exchange and complete on the same day?

We won't have the funds for the deposit until we get the funds for this house.

Its only the [10%] deposit that's required upon exchange, and often a lower % if you can negotiate that with your seller. The rest of the money that you're not borrowing is only required upon completion.

How much is the deposit you're getting from your buyer? That can be passed up the chain to your seller to form part of your 10% exchange deposit. Basically the solicitors just hold it and given an 'undertaking' (aka solicitor's promise) to pay it to the seller. If that's not enough to be 10% of your purchase price then you'd need to negotiate a lower % with your seller. That's fairly common, the agreement would just say that you're only putting say 6% down but you'll owe the remaining 4% to make up 10% in the unlikely event that you fail to complete. 

Bigphil1474

OP, are you buying a new house? Most house purchases are all sorted out by your solicitor so you don't need any money as such so long as your solicitor is satisfied you'll have the appropriate funds by exchange. If a new house, the developer might want a deposit maybe? You'd have to discuss with them if they want it before exchange.

TheJP

Bigphil1474 said:

OP, are you buying a new house? Most house purchases are all sorted out by your solicitor so you don't need any money as such so long as your solicitor is satisfied you'll have the appropriate funds by exchange. If a new house, the developer might want a deposit maybe? You'd have to discuss with them if they want it before exchange.

Answer is in the title. The OP is asking how does it work using the sale of a house as your deposit. The first person in the chains deposit usually an FTB is passed up the chain as the deposit which the solicitors in the chain will agree will suffice as a deposit for all. Then completion takes place. Its common for anyone selling and buying at the same time not to give additional funds as a deposit at exchange.

TractorFactor

saajan_12 said:

TractorFactor said:

We're using part of the sale of our house as a deposit (£100k) for our new house.

Does this mean we have to exchange and complete on the same day?

We won't have the funds for the deposit until we get the funds for this house.

Its only the [10%] deposit that's required upon exchange, and often a lower % if you can negotiate that with your seller. The rest of the money that you're not borrowing is only required upon completion.

How much is the deposit you're getting from your buyer? That can be passed up the chain to your seller to form part of your 10% exchange deposit. Basically the solicitors just hold it and given an 'undertaking' (aka solicitor's promise) to pay it to the seller. If that's not enough to be 10% of your purchase price then you'd need to negotiate a lower % with your seller. That's fairly common, the agreement would just say that you're only putting say 6% down but you'll owe the remaining 4% to make up 10% in the unlikely event that you fail to complete. 

Ahh, yes, I didn't think about the money we'd be getting as a deposit too.
Even if it's 10%, it will be less (money) than the 10% we need as we're buying a more expensive house.
I'll speak to the solicitors.