Funding Options on New House

[masterK]

We have agreed to purchase a newly built house and have put down a deposit of €6000. We need to pay 10% of the fee on the signing of contracts which is approx. €31k, however we will not be in a position to have this amount.

We are also selling our own house which we expect to fetch 300k and we have a mortgage of 110k outstanding so we have plenty of equity.

The whole purchase came up a bit out of the blue so we had little time to gather much savings. Will a bank generally be willing to allow us to drawdown the 10% or do we have any other options (bridging loan) etc?

 

[masterK]

I've been reading a little bit more on this. Am I right in saying that once I agree to sell my current property and sign contracts that at this point I will get 10% of the sale price and I can then use this 10% towards the amount I need to pay on signing contracts for a new house?

 

[JohnJay]

this will probably work for you, but you should ask your solicitor. Your buyer will transfer the deposit to their solicitor, who will transfer it to your solicitor. This can take a bit of time, so dont expect it to happen over night.

 

[laura28]

Can I ask Masterk if you there will be any time lapse or delay between you selling your home and moving into the new place?

 

[mf1]

"Am I right in saying that once I agree to sell my current property and sign contracts that at this point I will get 10% of the sale price and I can then use this 10% towards the amount I need to pay on signing contracts for a new house?"

Wrong.

The 10% you " receive " as a deposit is held by your solicitor as "stakeholder" until the transaction is completed.

You need to re-think your process.

Should you just sell your own house, abandon the new house and wait until your own house sells before trying to buy another property?
From experience, you either need someone to lend you the deposit ( as in think parent? aunt? uncle?) or try and borrow it from a bank who will be concerned about risk. There is always a risk (however small) that your own house fails to sell and you're stuck in a contract to buy new.

mf

 

[masterK]

"Am I right in saying that once I agree to sell my current property and sign contracts that at this point I will get 10% of the sale price and I can then use this 10% towards the amount I need to pay on signing contracts for a new house?"

Wrong.

The 10% you " receive " as a deposit is held by your solicitor as "stakeholder" until the transaction is completed.

You need to re-think your process.

Should you just sell your own house, abandon the new house and wait until your own house sells before trying to buy another property?
From experience, you either need someone to lend you the deposit ( as in think parent? aunt? uncle?) or try and borrow it from a bank who will be concerned about risk. There is always a risk (however small) that your own house fails to sell and you're stuck in a contract to buy new.

mf

Really? I find it hard to believe that the average person who is selling a house and buying another has 10% (approx 35-40k) after paying out a deposit of 5-10k and also has money to pay estate agents, solicitors etc. That would mean the average person selling one house and buying another would really need to have 60k in savings. Maybe I'm being a bit naive here.

 

[Blinder]

Really? I find it hard to believe that the average person who is selling a house and buying another has 10% (approx 35-40k) after paying out a deposit of 5-10k and also has money to pay estate agents, solicitors etc.

Estate agents and solicitors are not paid upfront, they are paid afterwards.
The booking deposit can be considered as part of the 10% deposit

 

[mf1]

Really? I find it hard to believe that the average person who is selling a house and buying another has 10% (approx 35-40k) after paying out a deposit of 5-10k and also has money to pay estate agents, solicitors etc. That would mean the average person selling one house and buying another would really need to have 60k in savings. Maybe I'm being a bit naive here.

Its all in the timing. If you sell, move out, clear your mortgage, and have equity, it is all seamless. The problem is in trying to "knit" two transactions together.

The big issue for most people is where to be living/storing the furniture and household goods ,in between closing on the sale and completing on the purchase.

mf