How does selling and house and buying a new one actually work?

[Laufeythejust]

I’ve never done this before and it’s all very complicated!

I’m selling a house for £285,000 and buying a new one for £300,000. It’s a newbuild so they are giving me a deposit contribution of £15000 which I am using towards flooring etc. My equity (minus all the fees!) should be around £50,000.

What confuses me is that I’m paying a lot out of my pocket now (20% of all the extras and lots of fees such as a RICS survey for my existing property). When my sale goes through can I recoup that money? Ie get the solicitor to send me £5,000 of the equity back? Or does it all have to go as deposit for the new house?

I feel so daft for not knowing and google hasn’t really answered my question (probably because I don’t know what to google!).

I've never bought a new build so hopefully someone with experience will be along shortly to comment on the upfront payments there, but I have seen them mentioned before on MN.

Are you in Scotland by any chance, as you mention paying for a survey on your current property?

Your solicitor/conveyancer will have a form that details the financial side of the transaction such as the deposit (this may come from you current property that you are selling) and what will happen with any surplus funds after the sale. You will need to let them know what proportion of the sale price is to be used as a deposit for your purchase.

Good luck with the sale and purchase OP.

Normally surveys, legal costs are paid up front using money that is not equity.

If the builder is giving you a deposit contribution then that will be given on completion date so you can use that instead of your full equity. It's meant to cover stamp duty. If you are using it for flooring you will need to pay upfront yourself and then reimburse yourself by taking out some equity at completion.

Are you getting a larger mortgage as surely the 15k covers the difference

Normally you need a pot of cash to pay for all fees, solicitors etc, then your depoait money is seperate

You don't technically have to use all your equity for the new purchase at all. It all depends on what you can borrow in terms of mortgage and what min % deposit is needed. Think of it in terms of on the day of completion you sell your house, the equity turns into cash very briefly that the solicitor then adds to the mortgage funds to then buy your new house. Any excess cash is then transferred to you.

So yes you can recoup it but would end up with a bigger mortgage and obviously still have those costs up front out of pocket.

Thank you so much for all the replies- mumsnet is amazing!

That’s such good news- I’m getting married in a few months (I stupidly decided it would be a great idea to do everything at once!). I’m just watching the wedding fund slowly dwindling and was a bit panicked! It’s probably going to be fine as I have a bit extra in there but it’s handy to know I can take 5k if needed.

The RICS survey is to repay the help to buy equity loan from the house we are selling.