Stupid questions about deposit and moving home

[DazzlePaintedBattlePants]

So we are looking to move up and I am feeling a bit thick about how deposits work.

We were FTBs for this house, so our 10% deposit was paid on exchange, all fine and dandy. However, when we sell this house, 10% deposit that we receive from our buyers will not cover 10% of the house we are buying. We have some savings to put towards the difference, but we can’t make the full 10% of the house we are looking to buy. What happens in this situation? Mortgage affordability is not a problem, it’s access to the tens of thousands we’d need between exchange and completion.

TIA!

You don't receive your buyers 10% deposit. Your deposit will be any equity that's in your house. If you can't afford stamp duty or whatever you can add that on to your next mortgage, but it's best to save your solicitors fees, survey fees etc in advance.

Yeah you'll get your equity back. So for example if your house sold for £200,000 but your remaining mortgage was £120,000 you'd have £80,000 equity to put towards your deposit. You can also use any saving towards your deposit too x

Ours just all transferred on moving day OP. I’m not sure they do the 10% deposit thing on exchange anymore.

You don’t get your buyers 10%
How much do you owe on your mortgage and how much is your home now worth? That’s the sun you’ll be left with in cash

Oh that’s fine then - we are lucky enough to have loads of equity. I thought you’d have to pony up cash! Thank you all.

I think there's some confusion here about your mortgage deposit and the deposit you pay on exchange of contracts.

Irrespective of how much equity you have etc, there is still a separate requirement to pay a deposit on exchange. What usually happens is that the deposit your buyer pays on exchange will then be paid to your seller as your deposit. If you don't have the cash to make it up to 10 per cent of your purchase price, your vendor and their solicitor will usually agree to accept a lower percentage. Often, this is all sorted between solicitors without you knowing much about it.

In reality, only the bottom of the chain stumps up 10% on exchange. Usually, this gets passed up the chain and the people further up agree that a smaller percentage is acceptable, but that if someone pulls out after exchange they are liable to pay the full 10% to their vendors.

In the rare case that people unreasonably demand the full 10% on exchange, and the buyers don't have the cash to hand (ie. it's tied up in their property), then exchange and completion have to happen on the same day.

Either way, solicitors are used to finding a way around these daft rules. Don't worry.

I’ve been asked in the past if I will accept less than 10% and said Yes. Equally we’ve sometimes paid less than 10% in the past. It’s not a fixed amount though the first time buyer usually pays 10%