Second-time buyer deposit - getting it refunded ?

[redstar]

I've asked this in another thread but it probably wasn't appropriate there, so i am starting a new thread.

if I were to sell my house for 400k, buy another for 500k I would need a 10% deposit (50k) up front. If I then get a mortgage for the 500-400=100k shortfall should I get the full deposit back on closing ? (The cash could be used for Stamp Duty).

Effectively. the mortgage is for 100k on a 500k valued house. The LTV is only 20%, so the lender is not as exposed as a 92% or 100% LTV ?

Has anyone done this ? Any reasons why it might not be possible to get the deposit back ?

 

[nt00deep]

If I understand correct, you have 50k cash to put in to deposit now. You have 400k in equity in current property. By putting the deposit down now, and getting mortgage for 100k, you are wondering if you can get your 50k cash back following draw-down of your mortgage.

Absolutely.

 

[Munsterdude]

I assume you have no outstanding mortgage on your current house? If so, no problems at all. Depending on if you intend to change mortgage providers or not, you might get the 50K via equity release on your current house to pay the deposit, and then pay that back on the sale of your new house. Make sense?

 

[redstar]

Thanks for the replies - really helpful.

nt00deep, you summarised the situation exactly. I'd rather use the cash for Stamp Duty and house furnishings etc ....

Munsterdude, I deliberatley did not complicate the example with the mortgage outstanding on the current house.

With this now included, I assume the figures would work out something like this;

Current house: 400k - (30k outstanding) = 370k

Now, 500 - 370k = 130k to borrow

I can still get deposit back ?

As for equity release, do you mean top-up the existing mortgage with the amount equivalent to the deposit, and the payback the outstanding mortgage + equity release value when closing ?