Deposit on buying a property

[bond]

Hi. If I am selling my property and buying another, then obviously I want to try and exchange contracts on the same day. Is this the time when I pay my deposit? Basically I want to use the equity in my existing property to make up a large proportion of the deposit on the new property, but I'm not sure about the timing (the mortgage lender will change on buying the new property). Would I need a bridging loan until completion ? Thanks.

[beckyboo]

Your buyer will pay the purchase price to your solicitor, who will use that to pay off your current mortgage and any left over can be used as your deposit against your new purchase and set up of a new mortgage.

When talking to a new mortgage lender be realistic as to how much will be available to use as a deposit and err on the low side.

On the day of completion all the funds are electronically directed to the correct accounts before keys are released. Your solicitor will then send a cheque for any balance owing to you.

[les saisies]

By deposit I assume that you mean the one that you have to make when you exchange contracts.

It is usual that as purchaser you pay a deposit of 10% of the purchase price on exchange of contracts, non refundable in the event of you failing to complete on the agreed day regardless of fault or reason.The amount of deposit, like all things in property transactions is negotiable, but the vendor would be unlikely to accept less than the amount of cash outlaid to date on the transaction.

Equally your purchaser will pay a deposit to your solicitor on exchange of contract.

It is considered unethical by most solicitors to use the deposit money from a client's sale to provide the deposit for the new purchase. If you do not have the cash available then you may well have to arrange an overdraft or bridging facility until the property sales are completed.

Most solicitors use the deposit money received as a means of paying accounts on your behalf, ie estate agents, stamp duty, their own fees etc. and then refund to you any balance on completion.

All you can do is ask your solicitor what he thinks. At the end of the day you are paying him for his advise.