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We've just started overpaying on our mortgage so it costs us less in the long run due to interest. However at some point in the semi-near future, we'd like to move house. With this in mind, should we stop overpaying on the mortgage until we have the cash deposit required for a new property, or can a deposit for a new property be taken from the equity that's been built up in our current property?

Some fictional figures to illustrate our situation:

  • Current mortgage value: £150,000
  • Expected sale of current property: £200,000

Does this mean we'd effectively have £50,000 deposit (plus any cash reserves) towards a new property due to the sale of our current property, or do we still require a large cash value (of 10-20%)?

Adrian

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You normally would not need a cash deposit in these circumstances. If you are selling and buying at the same time then the deposit you receive for the sale (at exchange of contracts) can be used as the deposit for the purchase (ditto).

Obviously at completion you have to make it all square up but at that point you have the money from your sale.

Last time we moved the only things we had to pay upfront were the various fees (mortgage application fee, search fees etc.). Even though the house we were buying was twice the cost of the house we were selling, we did not have to pay any extra deposit.

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  • (+1) this is why conveyancing chains are so critical - nearly everyone in the chain uses some money from their sale to make their purchase!
    – AakashM
    Oct 23, 2017 at 9:45

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