Putting down a deposit if your deposit is your equity

[Illumicrateme]

This is our first time moving home and our deposit would be the equity we have made in the current house. I keep reading about exchanging and putting down a deposit. How does this work if your planning to use the equity?

Your solicitor will sort it. They just sort of move it over at time of exchange of contracts. The rest follows at completion.
so your lenders will liaise with the solicitor or vice Versa.

just make sure everyone is aware. Solicitors, lenders and estate agents.
It’s very common

i think that only the first person in the chain puts down a physical deposit, that then moves up the chain. Of course, if you then pull out post exchange, you would have to come up with the deposit.

I have no idea how it works, but I did it. As someone said, solicitors sort it.

The money comes from the buyer to your solicitor, they pay the redemption sum to the mortgage on the house you've sold and the equity you are left with is paid to the sellers solicitors with the new mortgage funds.

As others have said it's all dealt with in the solicitors client accounts unless you are breaking the chain which case the equity sum will be paid to you and you'll need to transfer it to the solicitor which you buy your next home.

So typically the deposit amount is 10% of the purchase price. If the ftb is buyer a place for 300k they put in 30k of actual money. If the person selling the 300k house is buying somewhere for 400k technically they could be asked to top up the deposit to 40k on exchange. In reality what usually happens is everyone in the chain agrees to accept a deposit amount of 30k and the ftb deposit just passes up the chain.

It’s only the first time buyer at the bottom of the chain who has to physically have the deposit in the bank - everyone else uses their equity plus the deposit from the people below them in the chain.

We are selling to buy (up size) and realised we didn't really know how this worked either!
We asked - our solicitor has advised we will need to 'top up' the deposit amount at exchange to equal 10% of the purchase price (i.e. our buyers will pass 10% of the sale price to us, but this is less than 10% of the house we are buying so we need to put in the extra). Luckily we do have that money in the bank!

It's pretty normal for all parties to the chain (aside from those selling to the bottom of the chain) to agree to accept less than 10% as it just makes it easier for everyone to pass the FTB's deposit up. You probably won't have to find the extra unless you have very difficult sellers

This.
We’ve never had to put in any extra money. Everyone in the chain just agrees to accept less than 10% deposit, apart from the FTB.

That makes sense! Thanks for clearing that up for me guys. I was beginning to think I would need to fork out some additional money for a deposit.

You’re welcome. I remember being struck by the same fear in the past