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Original poster

Selling a house and deposit

18 replies

limitededitionbarbie · 09/01/2023 18:45

I've never sold a house before that I owned just me.

My last one was sold but it was dealt with by my ex which is a whole other thread.

I want to move. The area I live in is getting worse and I want to move to a better area for my daughter.

If I sell this house, will I be able to use what this house is sold for as a deposit or do I need to save another deposit?

Apologies if this is a stupid question but I'm going round in circles on the internet.

OP posts:
Iwritethissittinginthekitchensink · 09/01/2023 18:48

If I sell this house, will I be able to use what this house is sold for as a deposit

yes :)

Your equity will be used as the deposit.

eg

If you have a £100k house and your outstanding mortgage is £60k, you’ll have £40k equity that will be the deposit on the next house.

If the next house is £120k, you’ve already got £40k towards it so you’ll need to get a mortgage for the remaining £80k.

Ontheflipside_ · 09/01/2023 18:49

It depends how much equity you have. Eg if you bought it at a value of £300k with a 10% deposit your mortgage would be £270k. Say you've paid £50k off that, your current mortgage would be £230k giving you £70k equity.

Assuming you sell the house for more than you bought it, the equity would go up. You can then use the equity to put towards a new house.

Remember stamp duty, estate agent fees, increased interest rates, and removals.

Hope that helps.

Original poster
limitededitionbarbie · 09/01/2023 18:57

Thank you for your replies. Yes the house I would choose would be more expensive.

That is a relief about being able to use this houses equity as a deposit. I'd got it into my head this would not be allowed. No idea why.

It means I can start to look about at least.

I know moving will not guarantee these things.

OP posts:

Interested in this thread?

Then you might like threads about this subject:

General money
Galliano · 09/01/2023 18:58

At exchange you do need to pay a 10% deposit so if you sell and buy simultaneously and have no other funds to put in you won’t be in a position to do this. You can either negotiate a lesser deposit (but not sure if no deposit at all would be okay) or exchange and complete on same day to get round this.

Tothepoint99 · 09/01/2023 18:58

My question to help you would be

  1. Do you have a mortgage? If no, whatever you sell for can be used as a deposit or you can hold some back for works to new house.
  1. If yes, you should call the bank for a redemption figure on your current mortgage. The difference between that figure and what you sell for is what you can use towards your new house.
Original poster
limitededitionbarbie · 09/01/2023 18:58

Galliano · 09/01/2023 18:58

At exchange you do need to pay a 10% deposit so if you sell and buy simultaneously and have no other funds to put in you won’t be in a position to do this. You can either negotiate a lesser deposit (but not sure if no deposit at all would be okay) or exchange and complete on same day to get round this.

Yes this is my problem.

OP posts:
AgnesNaismith · 09/01/2023 19:00

Don’t most people exchange and complete on the same day?

Suedomin · 09/01/2023 19:01

but not sure if no deposit at all would be okay) or exchange and complete on same day to get round this.
Yes exchange and completion can take place on the same day

OneAndDon3 · 09/01/2023 19:03

limitededitionbarbie · 09/01/2023 18:58

Yes this is my problem.

Show quote history

No you don't. The deposit is passed up the chain. So technically the people at the beginning of the chain need to put in 10% as they have no equity and no house. Everyone else uses their houses as equity.

OhHeySis · 09/01/2023 19:03

Galliano · 09/01/2023 18:58

At exchange you do need to pay a 10% deposit so if you sell and buy simultaneously and have no other funds to put in you won’t be in a position to do this. You can either negotiate a lesser deposit (but not sure if no deposit at all would be okay) or exchange and complete on same day to get round this.

We didn’t have to do this! The person who was buying our house put their 10% down, and it was essentially sort of passed up the chain I think? worked out to be about 7% of our house price, so it was negotiated down a bit.

Also I think it’s more unusual to exchange and complete on same day, it’s risky. I’d have a week between.

Original poster
limitededitionbarbie · 09/01/2023 19:08

I'm easily confused on this subject. Do people think I need the additional deposit or not if I exchange and complete on the same day?

Is that standard or unusual?

OP posts:
Original poster
limitededitionbarbie · 09/01/2023 19:09

I need a mortgage broker don't I

OP posts:
Couldyounot · 09/01/2023 19:11

Deposit passing up the chain is how we've always done it. Seems to work fine

Did simultaneous exchange and completion when doing executor sale of my late parents' place (buyer asked to do it that way). It was all fine in the end but the 3 or so hours between dropping off keys with agent and getting call from solicitor to confirm completion were not enjoyable. I wouldn't recommend it at all if there are linked transactions (fortunately none in my case).

Tothepoint99 · 09/01/2023 19:13

limitededitionbarbie · 09/01/2023 19:08

I'm easily confused on this subject. Do people think I need the additional deposit or not if I exchange and complete on the same day?

Is that standard or unusual?

The consensus is that you don't. It is passed up the chain.

Original poster
limitededitionbarbie · 09/01/2023 19:15

I can start looking at least thank you ladies Flowers I'm a bit giddy now.

OP posts:
Original poster
limitededitionbarbie · 09/01/2023 19:16

I am still saving obviously but at least it means I'm not fucking stuck till I have a full new deposit

OP posts:
Galliano · 09/01/2023 19:21

Last time I moved there was a 200k gap between the house I sold and the house I bought. I paid the £20k additional deposit out of savings and understood that to be a common scenario with negotiation to reduce the deposit an exceptional one.

if you exchange and complete in the same day making up the deposit won’t be required. There are other risks as you’d have to commit to removal men etc which is why people don’t typically do it. My sister bought off a very elderly man recently and exchanged and completed on same day as solicitor was concerned he might die inbetween if not. She found it quite stressful.

hugoagogo · 09/01/2023 19:29

I haven't heard of anyone not exchanging and completing on the same day. Except for first time and cash buyers of course.

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