House move can someone please explain to me!

[gingajewel]

I am selling my house and am using the equity in my house as a deposit for my new house, therefore I will only have the money to pay my deposit on the day that the sale goes through. Is this wrong? Do I need money to put down on the day of exchange? I’m panicking massively! Please someone help!!

No, the deposit is effectively passed through the chain. The funds will transfer on completion.

Don't worry this happens all the time. Your buyers deposit will move up the chain and your house will effectively be collateral for the rest. Bear in mind if you pull out after completion you're still. Liable for the full deposit

Thankyou so much, what about of the house we are moving into needs more deposit put down than the deposit on the one on mine? Do I have to make up a shortfall?

@gingajewel

Thankyou so much, what about of the house we are moving into needs more deposit put down than the deposit on the one on mine? Do I have to make up a shortfall?

Not usually but check with your solicitor. Do you know how long the chain is?

Ours just passed up the chain. We sold to FTB whose deposit was sat there waiting. We bought a bigger house (and had a larger deposit than our buyers), and it doesn't make any difference.

The bottom of the chain has the deposit in funds, the rest of the chain has it in equity (which the solicitor will check you have).

Our chain is 4x buyers, we are second in the chain, the people who are buying ours are buy to let buyers, the house we are buying we have probably had to have put £3000 more deposit than the people buying ours (presuming we have both put 10%)

You only need to put the deposit for the house you are personally buying. If this is completely covered by your equity in your current house then that will all be sorted between the lender and solicitor.
If you have to make up a shortfall then you will be asked to transfer the amount by your solicitor about a week before completion.

If you have more equity in your current house than you need for a deposit - so say you have 50,000 in your house now but only want to put 25,000 into the new property then the balance of 25,000 would be paid into your bank account by the solicitor after completion (usually within a couple of days - they would settle any outstanding payments for themselves and stamp duty etc out of that money)

If you are not expecting any money back then you will just need to pay your solicitor fees etc as per a normal invoice.

Good luck!

@2020iscancelled yes we have more than enough equity to put down from the sale of the house, however I am worrying that on exchange date there may be a shortfall in the deposit, for example my buyers are putting a 20k deposit down but my deposit is 25k, where does that other 5k come from?

The bank! Your buyer is borrowing the rest of the money through their mortgage.

Sorry I don’t think I’m explaining myself very clearly! I have read that it is typical to put 10% deposit down on exchange date, so for example my buyers deposit is 20k but I need to put down 25k on exchange date where does that other 5k come from? I haven’t got the money to put down extra on exchange date as all my money is tied up in my house

Only the first buyer in the chain puts the deposit down at exchange. Everyone has their deposit covered by the equity. You dont get your buyers deposit til the day of completion. Then your deposit goes to your seller on that day too etc.

Ginga so imagine your house now is worth £200k of which £100k is equity and your new house is worth £250k. When you buy the new house you have agreed to put down a deposit of 10%. Therefore the bank will expect you to put in a deposit of at least £25k. In this example most people would put in the whole £100k and the loan from the bank would be the remaining £150k.

In your scenario, the fact that the person buying from you isn’t putting down exactly £25k doesn’t matter. The bank will only consider how much of your current property is equity and how much is loan on the day you sell it. So any equity you have built up is your potential deposit (plus any additional savings etc if you want). The fact that the seller is buying it with a sum of money that is part cash / part loan doesn’t affect your position at all. Does that help?

Sorry that should read ‘the fact that the buyer’

@ThisIsSylviaDaisyPouncer that really does, Thankyou for explaining. I am never buying another house ever!!