Payment of stamp duty and legal fees from equity?

needtowinthelottery

We’re selling our house for £450k. We have £240k left to pay on our mortgage / £210k equity. We’re buying a new house for £420k. 

Our mortgage lender (HSBC) has said we can ‘port’ our existing mortgage easily without needing to do a full application. I’m a bit confused about this as the purchase price of our current house was £310k, so the new house price is higher.

Ideally we’d like to pay all moving costs - legal fees, stamp duty and estate agent fees - out of the equity when the sale goes through. Is that possible?

This is our first time selling and buying (our current house was our first home) so feeling very confused and don’t know who to ask - conveyancing solicitor or mortgage lender?

Any helpful suggestions or knowledge welcome. Thank you 🙏🏼 

Flugelhorn

The price you bought your old house for is not relevant - if you are selling for 450 then you have 210 cash when you sell
you buy the new house for 420 and need to find 180 to make up the difference so 30 left over 

you can use the remaining 30 to pay some bills - certainly legal fees and estate agent fees are paid from the proceeds - but  I am not sure whether conveyancers require you to pay the stamp duty upfront (long time since I was in a chain) 

Tiglet2

As I understand it:

Your solicitor will receive £450,000 from your buyers on completion.

Your solicitor will need to send £420,000 to your sellers to pay for your new property.

Your lender is allowing you to port your mortgage, so £240,000 of the purchase price is provided by your mortgage lender.  The solicitor will send the additional £180,000 needed out of the proceeds for the purchase of your new property.

That leaves £30,000 to cover the remaining fees:   their own legal fees for conveyancing, SDLT,  land registry fees and EA fees. 

Is that going to cover it in full?  I'm assuming £21,000 for SDLT, £4,000 EA fees, £2000 solicitor fees, a hundred or so on HMLR fees, bank transfer fees £50 each transaction.   Might just about be enough, with a little left over which would be paid out to you (plus bank transfer fee), a few days after completion and accounting have taken place.

HMRC state that SDLT can be paid up to 14 days after completion without penalties, however the date when the transaction is completed (i.e. completion date) is when SDLT is due.  Your solicitor is unlikely to allow you to pay SDLT after the transaction is completed.  They will hold on to the monies received to date in the client account so that they can pay the SDLT from it within the 14 days - usually it is sent on completion day, but I guess it allows their accounting team some leeway.

daveyjp

Its a question to ask of your solicitor. Its not unusual for solicitors to require cleared funds for stamp duty before completing the sale. 

user1977

daveyjp said:

Its not unusual for solicitors to require cleared funds for stamp duty before completing the sale. 

It's essential if you're buying with a mortgage.

needtowinthelottery

Tiglet2 said:

As I understand it:

Your solicitor will receive £450,000 from your buyers on completion.

Your solicitor will need to send £420,000 to your sellers to pay for your new property.

Your lender is allowing you to port your mortgage, so £240,000 of the purchase price is provided by your mortgage lender.  The solicitor will send the additional £180,000 needed out of the proceeds for the purchase of your new property.

That leaves £30,000 to cover the remaining fees:   their own legal fees for conveyancing, SDLT,  land registry fees and EA fees. 

Is that going to cover it in full?  I'm assuming £21,000 for SDLT, £4,000 EA fees, £2000 solicitor fees, a hundred or so on HMLR fees, bank transfer fees £50 each transaction.   Might just about be enough, with a little left over which would be paid out to you (plus bank transfer fee), a few days after completion and accounting have taken place.

HMRC state that SDLT can be paid up to 14 days after completion without penalties, however the date when the transaction is completed (i.e. completion date) is when SDLT is due.  Your solicitor is unlikely to allow you to pay SDLT after the transaction is completed.  They will hold on to the monies received to date in the client account so that they can pay the SDLT from it within the 14 days - usually it is sent on completion day, but I guess it allows their accounting team some leeway.

This is really helpful and very reassuring, thank you Tiglet2 👍 

We’ve had three quotes from conveyancing solicitors (the one we used when we bought our house in 2019 and two others that our estate agent recommended). The best price to include all the search fees, land registry etc is £13,400 inc VAT. 

This includes the Stamp Duty of £11,250 (I checked the calculator on the UK gov website and this seems to be correct on a £420k property). 

Estate agent fee will be £4,590 (should have been 1% + VAT but we knocked them down to 0.85% + VAT as they’re keen to have more listings in our area!).

So, my calculation is we need £17,990 to cover this (£13,400 + £4,590). If we have £30k to play with, we will then have £12,010 left over. I assume this would be bank transferred to us upon completion, rather than paid off the mortgage? 🤷🏻‍♀️ 

Tiglet2

Yes, must have had a brain fart regarding the SDLT - you are correct.

The solicitor will repay any left over funds to you after completion - it isn't always the same day as their accounts department have to reconcile all the other payments going out to make sure there isn't a shortfall.  They will pay the surplus monies to you once they've had confirmation from all parties that their fees have been settled in full.  Don't forget these are estimate figures and I'm not sure if you have taken into account VAT, or maybe any indemnity policies agreed but not yet paid for.