# Trading up. Plenty of equity. Do I still need 20% if I have not sold my existing house?



## Allison1707 (19 May 2016)

Hi Everyone,
Just looking for a bit of advice please. We are thinking of moving house and have an existing home with a small mortgage but we also have small savings. We are 2nd time buyers and are very confused about the deposit amount that we will need. If we want to trade up to a property of €280-300k does this mean that we would need €60k Deposit now or is the equity in our home regarded as our deposit? We will be selling our home and not holding onto it. Its valued around €230k. How does it all work? as in, do you go through the process of applying for a new mortgage and hope for the best money wise as in how much would we get? would our existing €40k mortgage hinder everything and are we better off saving really hard and paying it off or can the €40k be added to the new mortgage? Our best case senario would be to get approved for €280 on our own salarys, go looking, get new house and move in, sell our house and use proceeds against €280 mortgage. Am i living in dream land? Thanks 

Some figures that may help

Current Property

Is this a single or joint application. _Joint Application_
Type of Property. 2/3 bedroom house/apartment. _2 Bed_
Value of Property _Aprox 230_K
Amount of Mortgage _€40,339 / €889 per month KBC 4.25% SVR_
Term of Mortgage. _4yrs 1Mth_

_Prospective Property €280-300K_

Any other relevant information. _Salary 1) 34,500 Salary 2)45,000_
Amount of savings and over how many years _16K over 20Mths_
Is there a lump sum from any other source? If so give full details. _Yes €15K from matching Childrens allowance per year and depositing into a separate acc for future college fees etc..._
Age of Applicants. _43 + 46_
Employment situation. _Both Private_
How long are you in current position and are you permanent. _13years + 6years both Permanent_
Have you any children. _Yes 2 age 6 + 8 childcare €460 per month_
Have you any court orders or Judgements. _No_
Have you any other loans and if so full details of amount/period/% rate and repayment amounts. _No_
Cr. Card situation. Full disclosure. _€800 outstanding on 1 – other clear_
Have any of your existing loan or credit card monthly repayments been paid late over the past twelve months, even if you made the repayment in full a few days later? If so, how many times in the past twelve months? _Nope_
Any previous negative Cr. history by either applicant. _Nope_
Are your savings and rent clearly visible and identified as such in your bank accounts each month _Yes_
Have you gone over your overdraft limit in the past six months, even if only for a day or two? If so, how many times in the past six months? _Nope_
If you have been refused a mortgage please give exact reason of why and address why you think you should not have been. _Nope_
Did you use a Mortgage broker or are you applying directly? _Don’t know yet_

Have you checked your ICB record to make sure it's clean?* _Nopewe did years ago and both were clean and we haven’t had any loans or missed any payment since_. Although I haven’t paid my water bill yet…


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## PGF2016 (20 May 2016)

If your current house is worth 230k and there is 40k outstanding that should mean you'll have 190k once sold to add to your savings for a deposit for a new house. If you're interested in properties up to 300k that should mean at most a mortgage of 110k. I don't see a problem getting a mortgage for that given your salaries. Go for it.


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## 44brendan (20 May 2016)

PGF2016 said:


> Go for it.


+1. Should be no issues of concern. Given your low SCV there are better rates to be obtained out there than 4.25% whatever you decide. AIB seem to be the more appropriate option for low rates at this time!


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## cremeegg (21 May 2016)

Allison1707 said:


> If we want to trade up to a property of €280-300k does this mean that we would need €60k Deposit now or is the equity in our home regarded as our deposit?


This is the key point. You sell your existing house first and you receive the sale price less existing mortgage and costs, you can then add this to your savings and it is available for a deposit on a new house.

In practice many people sell and buy on the same day as part of a chain


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## Allison1707 (23 May 2016)

Thank you all so much for the replys and valued opinions. I know that if we try very hard and combine everything we could probably look at clearing the 40K existing mortgage this year. This would leave us with no mortgage and a chance to start saving all over again.  This bring me back to the question...  Would we need 20% cash deposit upfront for a new loan of max €300k if we are sitting in a €220k asset? Would we really have to sell up first or would any bank loan us the €300K so we could buy 2nd property whilst 1st home is being sold? I'd sign it over to the bank as collateral against the 2nd loan if asked.... Just would be a great scenario for us with small urchins in tow.... Oh bring back bridging loans all is forgiven


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## Allison1707 (29 Sep 2016)

Hiya Everyone.  Still here pondering the different scenarios... Update...Mortgage down to €37k and savings upto €37K.... If we clear the mortgage we will have zero savings. If we need 20% deposit that would set us back about 2years.. We really would like to move next year before the urchins get to big. Any advice?


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## XMarks (29 Sep 2016)

You need to put your current house on the market. You use the equity from that as your deposit once sold. You don't have to pay off your current mortgage before you sell. It makes no difference. You cannot use your current house as a deposit. You need a deposit of 20% which is easily achievable through selling your house.


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## XMarks (29 Sep 2016)

Also when your house is under offer you can put an offer on another house. You close with your buyer when your seller closes with you so you move from your house to your new house on the same day. That is what most people do. There is no need to buy your next home before selling your current one.


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## Allison1707 (29 Sep 2016)

Hiya Xmarks. Thanks for the reply and yup that's probably the best way to go about it and would solve all problems ...but....I don't know whether that would work for us as too many variables such as, if we put our house up now and go sale agreed what happens if we don't have a property to move into? Sale falls through on either side etc...we have been keeping an eye on the market for 2years now and only 1property suitable to 80%of our wishlist in the area we are looking for has come up....it would be very hard to keep a buyer interested whilst we go hunting for a suitable home especially with the market at the moment. 
So that's where my queries on do we really need a 20% deposit come from and could we get a €280-300k mortgage prior to selling.... So buy new home with 10%Deposit... Move in... Sell original house... After disposing of original mortgage... Use balance to pay down New mortgage. 
I'm probably in dreamland but sure if you don't dream big what's the point


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## terrysgirl33 (30 Sep 2016)

If you find you aren't buying/selling on the same day, most people go and rent somewhere or move in with relatives until they find a house.


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## mf1 (30 Sep 2016)

"You close with your buyer when your seller closes with you so you move from your house to your new house on the same day. "

If only. To achieve this you need:

No chain
Preferably a cash purchaser - no reliance on loan funds issuing
Preferably an extremely patient purchaser
Everyone to be on the same page
Absolutely nothing to go wrong, no last minute hiccups, no missing money, no issues on searches 
And no-one throwing a hissy fit!

I had one vendor who threw a wobbly of monumental proportions on the closing date, locked herself in to the bedroom and refused to come out. I  don't think she even cared about the amount of aggravation she caused. So we put off the closing, everyone re-arranged their plans.....................

mf


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## terrysgirl33 (30 Sep 2016)

You can't leave us hanging!  What happened, I assume she isn't still in the bedroom?


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## mf1 (30 Sep 2016)

terrysgirl33 said:


> You can't leave us hanging!  What happened, I assume she isn't still in the bedroom?



Despite my recommendation that someone give her a damn good slap, her extremely patient husband of 25 years gently coaxed her out over a period of several hours, whispering words of understanding and soothing her tears. I suspect he had ground his teeth down to the gum during that time. 

I gathered afterwards from the estate agent that she was prone to grandstanding - I sometimes think that clients should have to complete a profiling exercise before solicitors take them on - there are some clients that you discover ( usually too late!) are so problematic that no possible fee could compensate you for the aggravation caused.

mf


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## Allison1707 (30 Oct 2016)

Lol Mf that was funny and as terrysgirl33 I had the image of her still there too....
So to update....
on Friday we met with an assistant mortgage advisor in one bank who after an hour of totally confusing us left us yes they will give us 300 sorry...240k with us providing a 20% +deposit whilst holding onto our old home as long as it's "rented".... 
I'm very disheartened over the whole thing now and my dream looks like just that...all for the sake of €36k as that mortgage is what is left on house now.... we went with the figures of....having €55k that we can accumulate in Deposit... combined salary of nearly @€80k...No childcare costs...parents have stepped in there....no loans... cleared credit cards...nothing outstanding (except water bill..lol).... so really What do banks want??????? are we stuck here for another 2/3 years while we save a further 36k or more? Why can't we be offered a 10% deposit + mortgage of an actual €300k? so we can move....do up existing house... then sell...using proceeds to clear old mortgage and balance off new mortgage... really thought it wasn't too much to ask...obviously not


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## Brendan Burgess (30 Oct 2016)

Why did you go to only one bank? 

Try a few different banks. 

You want to buy a house for €300k.
You have €37k deposit. 
The normal rule is that you need 20%, but banks can make an exception and require less. 
I would imagine that given your circumstances, some other lender would be delighted to lend you 90%. 

On combined salaries of €80k, they can lend you €280k, so that is not a restriction.

However, the best strategy is still to sell your current home first.  Even if it means renting for a while, it means you will be borrowing less and will have a choice of lenders and will get a very low interest rate. 

Brendan


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## Allison1707 (30 Oct 2016)

Hi Brendan. thanks for the reply. we've only started meeting with Banks. Hard to get time off work... so that was the first one we could jointly do on Friday... We will be meeting with more in the next few weeks and thanks to your work (wouldnt have considered them previously due to their record with existing customers)  I'll be contacting our bank kbc to see what they can do for us too. 
As we have 55k on deposit right now, do you think we have any possibility of getting a 300k mortgage with a 10% deposit exception without having to sell our own home first? 
(I'd rather avoid renting and all the hassle of packing a whole home up and storage etc if at all possible esp with an ASD child in tow....) Thanks again for your interest in this thread and your other post on it. Allison


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## bleary (31 Oct 2016)

It's absolutely possible,  I know haven did something like that for someone I know in a very similar position, well they had less equity and savings. 
Maybe a decent local broker is the way yo approach it for you they can shop your case around and cone back with ths best deal? you should only have to meet them


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## Allison1707 (5 Nov 2016)

Hiya bleary. thanks for the reply and sorry for the tardy response I've had a Revenue Audit for work to deal with this week...oh the joys....lol
Im not familiar with Haven but will look into them, I've received a mortgage pack from 2 others but would rather meet prior to handing over my life....so am trying to arrange meetings with EBS + KBC that suit work/them...
I did look at two broker sites and first one was charging €750! wow... and only went to 5 institutions. I also noticed that some banks don't deal with brokers so my limited opinion was to go directly to them all  via phone first then set up meetings.... 
I'm not in any desperate immediate this week or else type of hurry but have 6month idea in my head, so am pondering weather to wait until the new year and get in with them all re the 10% exception or I wonder is now a better time if banks haven't used up all their allocated allowances?  really is very hard to know what to do or the way things work as I'm just a mere mortal and not in the financial services sector so am at a loss knowledge wise..lol


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## Allison1707 (25 Jan 2017)

Thanks everyone and just to update, own house valued at a minimum of €290k, mortgage at €34K, savings at 52k, 2 lenders will give us exemption on deposit @10% on a new mortgage of €280 to buy while still in own home so we wouldn't be under pressure to move on a deadline but.... we are struggling with affordability on two mortgages at same time.  
So, we are thinking of paying off our mortgage and starting to save for our deposit all over again.....  what do you think?


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## cremeegg (25 Jan 2017)

Well you asked what we think.

In my opinion you are way overthinking the whole thing. Moving house is stressful, recognise that and get on with it. But you are in a strong position financially.

Draw up a plan of action with a time line

Look at houses that you might want
Put your house up for sale.

Make an offer on a house you would like.
Accept the best offer on your existing house.

Sell your house, but the other.

If you don't you will still be there in two years or worse get so frustrated with the whole thing that you do something impulsive.


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## Allison1707 (25 Jan 2017)

Hi Cremeegg, 
Thank you for your reply and yes i do want opinions as i am clueless when it comes to mortgages so all welcome.

As previous post we are trying to not put our house up for sale first so that is a bit of an issue as in theory we dont have enough disposable income to service 2 mortgages so our thoughts are about clearing our existing mortgage with our savings and starting all over again saving for a 10% deposit. But i am just wondering about this and weather i am missing something as in if im borrowing €280 and the house is worth €290 would the banks look for 10% or can my house be used in anyway?

Plan of action is - 
Pay off mortgage on 2nd February as im awaiting on the redemption figure from my bank so should have it by then.
3rd February - Apply for New mortgage (do i need 20% or 10% or just a booking deposit?)
Look for house - have been doing so for 2 years so not hopeful
Start decluttering own house down to bear minimum
Find House .... Put a deposit down? (really havent a clue what happens here....)
Put our own house up for sale
Move in to new house
Do up old house
Sell 
Use proceeds to pay off New Mortgage.

Have a holiday 

So thats the plan.....


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## CPM_81 (25 Jan 2017)

Yes you do/will need a 20% deposit as you are a second time buyer.

You'll be depleting all your savings to clear your mortgage. Where will the deposit for new house come out of?

You don't have the cash capital to do all you want to do without selling the house.

I think you are putting the cart before the horse.

I would sell the house, rent somewhere until the ideal property comes along and continue to save.

I really think you are over-complicating matters unnecessarily, unless I don't fully understand your plan.


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## Allison1707 (25 Jan 2017)

Thanks CPM-81 and yes I do tend to stress/overkill on things but I am rethinking everything.... especially paying off our 34k mortgage out of our 51k savings as you rightly point out I wouldn't have enough €€€€ to move.... 

I'm not in a position to sell up and rent as I have a special needs child so not practical on any level. That's mainly where the quandry is coming from, trying to be as least disruptive and stress free as possible. Hence the clear mortgage... Own our own home...find a new home... Look for as long as it takes....buy....then sell our old house....i don't want to be under pressure re moving out date or homeless.....   
I will only need 10% though as we have asked about the exemption and 2 lenders have said yes..

I really do value each piece of advice given and apologies if it seems like I'm going around in circles procrastinating. But this is huge for me and my young family and all on me so I don't want to make stupid mistakes. 

I'll update in a few months.  Thanks everyone.


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## Gordon Gekko (25 Jan 2017)

What rental income would your current home generate?


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## Allison1707 (26 Jan 2017)

Hi Gordon,
I've been told 1200-1400 per month. 
Thanks


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## Damuint (6 Feb 2017)

I think you should speak with a broker. We'd a similar situation and we managed to switch the old house to an investment mortgage and rent it out. We did have 20% deposit but nowhere near the equity you have.


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## roker (7 Feb 2017)

Are we getting confused with deposits, in my experience the estate agent does not require 10% is this not to the seller? When I sold my last house the estate agent did not cover his fees from the deposit and instead of them paying the solicitor the balance on the sale it was the other way around which caused a few problems


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