Deposit when trading up

T

talofv

Registered User
Messages
11
We're hoping to trade up in the next while, and are aiming to complete the sale and purchase on the same day if we can. In order to do this, am I right in thinking that we should hold 10% of the price of the new house in cash, as we'll need to deposit this before we will have the sale proceeds from our current house?

We do have enough cash to cover it, but I dislike having that much cash sitting around when it could be put to better use elsewhere.

Thanks in advance.
 
No, you're thinking of the equity required. You do need at least 20% but we will have more than that once we sell our own house.

Before we get to that stage though, you usually need to transfer a deposit of 10% to estate agent when you sign contracts - or at least we did when we bought first time around. I'm wondering if you still need that in cash when trading up, or if there is any allowance given for the fact you're selling a property.
 
talofv said:
No, you're thinking of the equity required. You do need at least 20% but we will have more than that once we sell our own house.

Before we get to that stage though, you usually need to transfer a deposit of 10% to estate agent when you sign contracts - or at least we did when we bought first time around. I'm wondering if you still need that in cash when trading up, or if there is any allowance given for the fact you're selling a property.
Click to expand...
Yes you will need your 10% deposit and then you can take the balance from the equity from the house when the sale goes through.
 
talofv said:
Before we get to that stage though, you usually need to transfer a deposit of 10% to estate agent when you sign contracts
Click to expand...
The booking deposit (as it's called) might not always be 10% – I only had to put down 5% €5k. But I don't know what is typical and what is the maximum.

Booking deposits are fully refundable if you pull out of the purchase after you've gone sale agreed – as long as you do so before you sign contracts. At least, that's how it was a few years ago!
 
Last edited:
Thanks all. Will continue holding the cash.

For our first house purchase, we paid €5k as a 'booking deposit' when we went sale agreed, and then had to pay 10% on the day we signed the contracts... before paying the full amount via our solicitor on the day we closed.

@TrundleAlong You could be right, we might have paid the 10% to the solicitor, I can't remember. We definitely paid the initial €5k to the estate agent and it was held in an 'escrow' type account.
 
Paul F said:
The booking deposit (as it's called) might not always be 10% – I only had to put down 5% €5k. But I don't know what is typical and what is the maximum.

Booking deposits are fully refundable if you pull out of the purchase after you've gone sale agreed – as long as you do so before you sign contracts. At least, that's how it was a few years ago!
Click to expand...
Booking deposits are not the same as the 10% you pay when exchanging contracts.
Went sale agreed on an apartment last year and paid 3k, pulled out of that and then paid 5k to go sale agreed on a house (which completed in about 6 weeks). It probably is a mix of the estate agent and the price being paid.
 
talofv said:
We're hoping to trade up in the next while, and are aiming to complete the sale and purchase on the same day if we can. In order to do this, am I right in thinking that we should hold 10% of the price of the new house in cash, as we'll need to deposit this before we will have the sale proceeds from our current house?

We do have enough cash to cover it, but I dislike having that much cash sitting around when it could be put to better use elsewhere.

Thanks in advance.
Click to expand...
I taught second time buyers needed 20% deposit??
 
help999 said:
I taught second time buyers needed 20% deposit??
Click to expand...
This was discussed above in post #2 and #3.

We will have ~50% deposit once we sell our own house. However, we won't actually have those funds until that sale goes through.

Before we get those funds you usually need to deposit 10% when signing contracts, which means we will need to hold that amount in cash for now. I was checking if there was a way around that for people trading up, but it seems not.
 
People are still confusing deposit with equity, or the balance of the purchase after the mortgage. They are completely different.

A deposit is paid to the estate agent to secure the deal and move to the contract formation stage. This is typically in the region of €5k, but can be more depending on the house price. The agents usually set this value at a level above the fees they will be due on completion. Saves them having to chase money. That deposit is fully refundable should the deal fall through.

The rest of the price, be it made up of mortgage, savings, or equity to be released from another property is just money put towards the purchase on completion, it is not a deposit in any sense of the word. Once paid over, barring a few rare exceptions, the deal is done.

The 10% Vs 20% confusion is likely due to the mortgage lending limits (LTV or Loan To Value) that allow first time buyers borrow up to 90% of the purchase price while others are limited to 80%.
 
Did the OP have to apply for a new mortgage on the new house or did he just carry over the loan. its that side of the process that confuses me.
will you in effect have 2 mortgages until the first house is old.?
will the bank give you a mortgage to buy a home when you already have a mortgage on a home.
 
Last edited:
help999 said:
Did the OP have to apply for a new mortgage on the new house or did he just carry over the loan. its that side of the process that confuses me.
Click to expand...
Most likely it's a new mortgage. Most mortgages are unique to the Borrower/property combination. The exception is Finance Ireland.

Finance Ireland announces major innovation for Irish mortgage market - Finance Ireland

Finance Ireland announces major innovation for Irish mortgage market Launches 20-year fixed rate mortgage – from just 2.60% (2.66% APRC) Twice the length of longest fixed rate currently available Range of terms and options give unprecedented flexibility “One of the most significant innovations...
www.financeireland.ie www.financeireland.ie
help999 said:
will you in effect have 2 mortgages until the first house is old.?
Click to expand...
Depending on their finances the lender may be happy too allow the op to have two mortgages or the lender may require that the first mortgage is discharged.
help999 said:
will the bank give you a mortgage to buy a home when you already have a mortgage on a home.
Click to expand...
As above it really depends on your capacity to service two mortgages or present the case for one the houses as a rental property.
 
OP here. We're applying for a new mortgage for the new home - we couldn't carry over the current mortgage, and we didn't think of trying to have two mortgages.

We have no interest in owning two properties, but hypothetically, we could afford the two mortgage repayments. However, I'd imagine the bank wouldn't let us borrow that much overall (Central Bank rules) so we are looking to sell our house to fund the majority of the new purchase.
 
You must log in or register to reply here.
Back
Top