booking deposit

I'm thinking of selling my home and buying a house closer to town. I have no savings for a booking deposit on my new home, so could I get a top up on my old mortgage and then pay this off when my old home is sold??? I hope that makes sense!

Booking deposit is usually a relatively small amount, in the context of overall transaction, e.g. €2,000. Contract deposit is usually much larger, typically 10% of the purchase price.

If you have contracts exchanged on the sale of your old home and your new mortgage approved, you can usually get bridging finance from your lender to pay deposits.

Liam D Ferguson
www.ferga.com

Thanks LD. So I would have to have sold my home before the bank would give me bridging finance? It seems a bit risky as the vendors on my new home could pull the plug at any stage, thus i'd be homeless!!

depending on your circumstances etc and how much equity you have in your property at present you could more than likely get a top up from some of the myriad of lenders offering these products. Either way it would probably be better to sell first as you would then know exactly what your budget is.

From a current valuation I have approx 80k equity in the property at present. Do you reckon my current mortgage provider ( if I was staying with them for my new mortgage) could issue me with extra funds to purchase the new property?

I imagine Liam would have a better idea about this, however yes, there is certainly every possibility. As far as I know banks frequently accept equity as a 'deposit', however Loan to value ratio on investment properties (they will have to term the second property as investment, regardless of the rationale behind the purchase) would probably have to be below 75% ie. with 80K equity the max you would get would be 320K (in total ie you would be advanced a max of 240K). Additionally the normal income requirements would apply.

A lot depends on whether or not the lender feels you have the financial capacity to repay both mortgages, even if this is not your intention. If they allow you to close the purchase of your new home before you've sold your existing one, what's stopping you from changing your mind and holding on to the existing one?

If the lender feels you only have the capacity to repay one mortgage they will insist that you at least have contracts exchanged on selling the first before extending you bridging to buy the second.