Raising 10% deposit on signing contracts (trading up)

D

dishwasher

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Hi,
We have been following the AAM advice over the years to have enough in cash to meet emergencies, pay for holidays etc and put the rest of our savings into pensions and paying down the mortgage. No other shares, investment properties or anything complicated.

As such we have a very healthy LTV on our current house. We want to move to a bigger house, which will need some work doing. We are both working full time, past the expensive childcare stage and can afford the bigger mortgage. Both private sector, full time, PAYE, in jobs for a long time in stable sectors - so luckily affordability of higher mortgage is OK and no issue with banks wanting to lend to us.

Current House - Sale Agreed at €755k
Current Mortgage - €295k (AIB)

Cash in the bank - €50k
Fees (EA, Stamp Duty etc) - c€20k
Budget for Renovating the new house - c€100k

New House Sale Agreed at €870k
Applied and approved for mortgage of €515k from EBS (LTV 59%)
Amount retained from existing house for renovation works when we take out new mortgage - €85k
2% cashback from EBS - €10k

Buyers of our current house have finished asking questions, contracts have been issued, and they are expected to sign in the next week or so, paying their 10% contract deposit.

We have no intention of signing our own contract for purchase until they have signed our contract.

However there is a stumbling block! We need to pay the 10% deposit required on signing contracts for the new house. This means we need €87k in cash when we sign contracts and we only have €50k so short €37k. Options explored so far:

1. Release equity from existing mortgage - AIB said no, only for home improvements, what we are looking for is "Bridging Finance" and they don't do that under any circumstance.
2. Take new mortgage with AIB instead of EBS (even though they are really the same company) and so all finance will be with AIB brand. AIB say wouldn't make a difference
3. Take out a car loan and then repay it after a few weeks. Doesn't work as draft for car loan only made payable to a SIMI dealer.
4. Access the deposit paid by our buyer - not allowed
5. Sell house first and rent for a few weeks. Short term rental for a family of 5 somewhere close to school while putting all our furniture etc in storage is going to be expensive and risky. Makes me very uncomfortable, to sign contract to sell our house while depending on an air-bnb type place for 2 adults and 3 kids. No family in Dublin so no option to stay with them.
6. Ask buyer to accept a lower deposit and if he says no, let the house fall through, sell current house, sign a years' lease for a family home rental while we wait for another house to come up (but looking at €3k per month to close to school or €2.5k outside the immediate area, so also a big waste of money).


So AAM experts - have you any other ideas? We are dealing direct with AIB / EBS - would a broker make a difference?

Thank you!
 
Have you tried the Credit Union?
Have you asked family or friends?

If so, asking the buyer to accept a lower deposit is really the only option.

You could try taking out a mortgage with Pepper. They seem more flexible, so they might be able to do that.

Brendan
 
Hi
Is there any chance one of your employers will advance you the money/wages with an agreement to pay some off each week or take less wages until house is sold .Do any of you pay Contributions into Pension AVC which could be parked and be used to pay back employer until house is sold and money received.Do we still have option to take money back out of an AVC if you have paid into one you may be able to put it back in again later before end of tax year(you will not be able to recover USC / PRSI paid on the way out when you pay it back in) or at least have the paper work done so you and anyone advancing you money knows you have the means to pay back the advance
 
Last edited by a moderator:
Hi,
Looks like AVC withdrawal is no longer available since 2016. I just checked some accounts we have in the kids names for college savings and I think we can withdraw these which will help a bit, and might get us closer to a figure that the seller might accept. Not members of a credit union and only want to ask family as a last resort. Will also check out pepper. Thank you
 
Have you spoken to your conveyancing solicitor? I raised this with mine because I'm going to be in a similar boat shortly. I mentioned I would have up to 20k for a booking deposit but that's all and he assured me that it happens all the time. He said that when the time came, he would explain to the solicitor for the other side that the money was tied up in the equity and that since the closing would follow the initial contracts within a matter of weeks, it was unlikely to be an issue. He said it's so common, often the solicitors don't inform their clients; they just move along with it. Sounds a little risky/presumptuous; however, it can't be uncommon for second time buyers to be cash-poor.
 
Surely this happens all the time. And is the money not just held by their solicitor until closing? I would imagine that 50k and explaining that the rest is tied up in equity is enough to let them know you are serious and will be going through with the sale. If I remember correctly we were in a similar situation back in 07 where we didn't have the full amount until our apartment sold.
 
Thanks all. Our solicitor has said that they normally expect 10% but she can ask for a lower deposit so I am going to give this a go.

If our buyers asked us I would agree so how that sellers will be flexible.

I agree it must happen all the time so thought there must be a way around and really surprised that the banks can do nothing for us.
 
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