I can't work this out

[PositivityNeeded]

I own my home outright and need to sell as my relationship is over and the sale will free up some much needed cash.

I've only ever dealt with the purchase of this house which was cash so had the 10% requested deposit. However, now all my cash is tied up in this house, how do I go about paying the 10% deposit on a future house without a mortgage lender? Do I need to take out a loan? I can't come up with over £20K as a deposit. Please could someone help?

Is there any equity in the house? If you are selling for more than you paid for it then that can be used as your deposit if it amounts to the amount required.

She owns it outright so there must be.

You sell and use the equity as a deposit for the next house. I think something is missing op from the question?

Ignore me, it’s early.

I don't quite understand what you're asking. If you own this house outright and you sell it, then that money goes into your bank and you pay for the new house with that.

You sell and purchase at the same time so the cash comes straight from one house to the next. I think you're confused on the process of buying.

Oh I sort of get it - when you buy your first place as a FTB, you lodge your deposit with your lawyer ahead of completion day, with the remainder to follow. OP won’t have the cash until completion day so can’t transfer it in advance.

I don’t know the answer Op but I can’t imagine it’s uncommon so would guess that your lawyer’s client account just gets the 100% on completion day with no monies in advance - so you’re just legally bound for the advance payment on exchange rather than having physically handed over the cash.

You use the money from the deposit paid by the person buying your house.

Oh I sort of get it - when you buy your first place as a FTB

She’s not a first time buyer, her very first sentence says she owns her house

@bluntness100 No, but when she bought the last place she’d have had the deposit in cash, she doesn’t have that this time as it’s in the house. So she’s concerned about not having the liquid cash to put up with the lawyers at completion. My thinking is that it must all just go on exchange day instead, but I don’t know that for certain.

Sorry, my head is all over the place.

I meant if you have a mortgage, your lender provides the 10% deposit so you can exchange. As I don't have a lender, and my cash tied up in the house with nothing much in the bank, how do I come up with the 10% I'll need on the purchase of the house I wish to buy without a lender. People seem to exchange a couple of weeks in advance of completion so I won't have any funds.

Sorry - I’ve mixed up exchange and completion in the above - should be

concerned about not having the liquid cash to put up with the lawyers at exchange. My thinking is that it must all just go on completion day instead, but I don’t know that for certain.

Yes @Dollywilde - that's what I mean.

@GeorgieTheGorgeousGoat

You use the money from the deposit paid by the person buying your house.

Ah ok... so they exchange first and once their deposit is with the solicitor, I can then use that to do my exchange?

There is a box to tick on the contract that the deposit is coming from the sale of your current property. Therefore your solicitor doesn't require you to pay the 10% deposit on exchange

If the sale fell through after exchange you would still be required to cover the 10% plus costs. But this is something to chat to your solicitor about.

As pp say, it is very common not to transfer cash to the solicitor and to only use the equity in the house. Your solicitor or their assistant will be able to explain any queries like this for you.

Got you. Sorry for my confusing exchange and completion above too, still in need of !

Like I say my assumption is that you don’t hand over the physical cash in advance so much as just become legally liable for it (so the vendor of your new place could sue if you backed out) with all the physical money being transferred through the chain on the day itself. But not my area so one for the property lawyers!

You will use the deposit your buyers give you. Presumably if you’re looking to free up some cash you’ll be buying somewhere cheaper, so you won’t need to worry about topping it up.

Another x-post. Typing too slow. Going to get that ...

Have you found a house you like OP? If so, you should be able to exchange contracts/complete the sale on the same day, with your solicitor then transferring the money across. Or, you could sell yours first and rent for a while until you have the cash in your bank account. Or, you could get a loan and pay it off as soon as you have the money from your sale?

All great advice here, thank you so much. My head's in a spin so I'm not thinking straight. Just trying to get things in order so I can sell and move on but had no idea how it all happened. Yes, downsizing. I did think about renting as I laid awake in the small hours trying to formulate a plan.

The person/couple/family buying your house will send 10% to your lawyer on exchange date. That plus 20k that you will have should be sufficient for new deposit?

If it is still not enough for deposit for your next purchase, then you can exchange and complete on the same day with your house sale and purchase of a new place. However, it will be very stressful and sellers of your new house have to be on the same page with you.

Will this work for you?

We have only paid a physical deposit when at the bottom of the chain (first purchase, and second purchase because there wasn’t enough equity in the flat). Last time, we didn’t pay a deposit but our buyers at the bottom did - I assume their agreement to buy ours provided the collateral needed for us to exchange on this. No mortgage funds are released until completion day. Sometimes, for more complex sales a bridging loan can be used (when the purchase and sale don’t like up, for example). But it doesn’t sound like you need this (and they are not cheap).

Don't worry about it at all, the solicitor just does it. They take the money from the equity in your house and just give you back anything left over.

If you are downsizing then the 10% your buyers are giving will cover your deposit on a new house. Even if you are not downsizing I think it is fairly common for the person at the bottom of the chain's deposit to pass up the chain. The people higher in the chain are asked (encouraged) to accept a smaller proportion. So person A buys flat for £100000 with £10000 deposit, person B buys bigger house for £200000 but person C is asked to accept £10000 as a 5% deposit.

Is everyone still doing 'exchange & complete on the same day', because of Covid, so deposits aren't a thing at the moment anyway?
Speak to your solicitor and ask them to explain the mechanics.