Deposit when buying and selling

[1984isnow]

I have done some searching on this, but am being very daft and can't quite understand whether the proceeds from a house sale act as the deposit when moving.

I have seen some information that says the 'first' buyer's deposit can get passed up the chain, but if that's not enough, do you need to have the cash in advance as you would as a ftb?

So, hypothetically I want to buy a house for £200k, my current house is to sell for £100k. I can borrow £150k and have £50k equity in the house.
The buyer of my house is getting a mortgage with 5% deposit. So their £5k is not going to be a high enough deposit to pass up the chain, to my seller. Would I need to have the extra cash in my bank in advance, or can the money from my house sale be used?

Also, so I can get a decent idea of what I can borrow, when I'm completing mortgage calculators, and it asks for the deposit amount, can I put in the amount of money I would get from the house sale, or is this only referring to cold hard cash in advance?

Also! In addition to the first question, if my buyer has only £5k deposit, and I need to make up the rest in cash, would I need to be able to cover the full amount(ie in this case £45k, to add to what I have borrowed, or is it just a deposit and the rest is paid after the money from the sale appears)

You use the equity in your house as deposit, so if you're selling a house for 150 that you owe 100 on, your deposit is 50k.
You don't need to find a deposit, and can usually use equity to cover stamp duty, solicitors fees etc also.

Great thank you. I thought it was that simple, then read that the deposit can be passed up the chain, but couldn't find what happens if that deposit isn't enough

No that is incorrect. The remaining equity in your house is only available on completion, and cannot be used as a deposit.

If your buyer pays 5k deposit, you can use this plus any cash you have. This means you will have less than a 10% deposit available om exchange and is fairly common. It is worth highlighting this to the agent/solicitor at the outset of a transaction so it can be dealt with in the paperwork. Your solicitor will advise you of the implications of having a small deposit.

We've fairly recently moved, the entire deposit came from the equity in the house, I have no idea how much deposit my buyer had, that didn't come into it at all, the solicitor dealt with all of the moving about of money.

Newcornish, I moved 2 years ago. Categorically didn't put a penny down as a deposit, we sold a very cheap house and bought a very expensive one. No way would the deposit form the person who bought our house have been enough without the equity, I'm really confused by your comments.

@Woeisme99 everything @Newcornishmama has said is correct, your conveyancer will have negotiated for you to use your buyer's deposit on your onward purchase even though it was less than 10%, this is very common.

If you think about it, the idea of the deposit is that you can be made to physically hand it over if you fail to complete as specified in the contract after exchange. You don't have the money in the bank from the equity in your house to be able to physically pay to the other side until you complete your sale, so you cannot use it as your exchange deposit.

You can use the equity as your "deposit" towards the next house in terms of your mortgage, e.g. your equity is £10k and the mortgage is £90k for a £100k house, giving you a 10% "deposit" for mortgage purposes. This is totally separate to the exchange deposit though.

Hope that all makes sense all in all OP, don't stress about it and ask your conveyancer about it if you're concerned at all

@Woeisme99 I am a solicitor so I can assure you that I am correct. Hopefully the explanation by @Monetmoney has cleared things up for you.

Well blow me down, my solicitor explained it to us that everyone exchanges simultaneously and the money passes up the chain in almost a single transaction, which I didn't even think to question.

More than happy to be wrong of course (which I clearly am) but I think for the level of answer OP wants - the same level that I wanted from my solicitor, then you can use your equity as deposit surely? Albeit not technically true, but no one is going to ask you to find 50k on exchange day.

@Woeisme99 you can't use equity as the deposit for exchange for the reasons explained in my last post, but as also previously explained, negotiating a lower exchange deposit is common in these circumstances. OP needs to think of the exchange deposit and the "mortgage deposit" as two separate concepts.