Small mortgage to boost deposit?

[Cicera]

I'm in a situation where I own a property mortgage-free, but don't actually have lots of money for a deposit to move, even though I have all that equity.

Can I take out a small mortgage (say, £20,000) to boost my deposit? It's frustrating as I'm basically wanting to buy places worth the same as my current property, but I can't just do a straight swap!

Eh, so why can't you sell your house and use the equity to buy another outright? Why do you need a deposit? Am I being thick?

I don’t see the problem? When it comes to completion, your solicitor will just transfer sale proceeds to your new property.

You shouldn't need one.

You only need a deposit for a mortgage don't you? You don't need "available" cash to move house. The proceeds of the sale will fund the new house

Your deposit will be on paper if you are selling and buying - you don't actually need the money immediately available. It passes up the chain on paper too. Only a FTB or cash buyer has to actually transfer cash to their solicitor as a deposit.

I don’t think you understand the system. You sell your house and on completion the money from your sale will go to your solicitor who will send it to the solicitor of the property you’re buying who then transfers it to the sellers. You never see the money it’s just a chain of sale. Pretty standard.

I don't see how you could need a deposit in this situation.

There is always a deposit - usually 10% of the purchase price - which is committed at exchange. The reality is that if funds are tied up in a property in the chain which is being sold then the deposit is accounted for on paper. Should the sale fail to complete then the purchaser would have to pay the vendor the 10%.

Wowfudge - thank you! That's very clear.

I think was confused because when we bought this place we were FT and cash buyers, so paid the deposit cash (through the solicitors etc) and it definitely left my account!