How does trading up work?

TradingUp

I’m sale agreed on my existing house (owned outright with no mortgage) and sale agreed on a bigger house. The proceeds from my sale will cover about 70% of the purchase and I have mortgage approval in place for well above the balance. Luckily my job is secure and not affected by covid so I don’t anticipate any mortgage problems.

Purchasers of my current house are first time buyers with finance in place. Vendors of my next house are moving to another property they already own. So the chain is very short.

Two questions please:
I had thought it would be possible to complete both transactions on the same day so I wouldn’t need to find temporary accommodation and wouldn’t need to move my belongings into storage. My solicitor is saying this is virtually impossible and I would need to finalise my sale first. I understand how that is more straightforward but is my preference really impossible? He has been vague as to the reasons. Is he right? Or can it be done and if so how? Has anybody experience of this?

Secondly, the solicitor for the house I am buying is asking for the full 10% deposit when contracts are signed. Since most of my money is tied up in my current house, I don’t have easily access to this much in cash. Again my solicitor is shrugging his shoulders and saying “find it” whereas my mortgage broker says usually the solicitors will negotiate a lower deposit in these situations. I’ve already paid 2% as booking deposit and could easily stretch to another 4% in cash but reaching the full 10% will be difficult.

Do I just have a useless solicitor? It doesn’t feel like he’s acting for my interests at all and seems to be making life convenient for everyone else in the chain bar me! Or are my expectations wrong?

Thanks

enrique66_35

Two things to consider - check your loan letter of offer for the mortgage but I would be fairly sure it has a condition that the solicitor has to confirm they have a substantially unconditional contract for sale for your house before the loan can be drawn down - in other words, your house sale must complete before you can get the mortgage on the new place so that makes same day closing difficult.

Second thing is the deposit you mentioned - if you can't produce the 10% from your own funds then they will be relying on using the proceeds from the sale to meet this - again this necessitates your house to sold.

Your solicitor should have explained that more clearly but I would guess that the above are the sticking points stopping both transactions happening on the same day - should only be 3-4 days of a gap, maybe less but stick sucks to have to find somewhere to stay to bridge that gap. Could ask the sellers of the new place if they'd facilitate you leaving your stuff in the house after contracts signed and prior to closing (i.e. during the gap period) to avoid having to use storage. Good luck!

TattooedLady

TradingUp wrote: »

I’m sale agreed on my existing house (owned outright with no mortgage) and sale agreed on a bigger house. The proceeds from my sale will cover about 70% of the purchase and I have mortgage approval in place for well above the balance. Luckily my job is secure and not affected by covid so I don’t anticipate any mortgage problems.

Purchasers of my current house are first time buyers with finance in place. Vendors of my next house are moving to another property they already own. So the chain is very short.

Two questions please:
I had thought it would be possible to complete both transactions on the same day so I wouldn’t need to find temporary accommodation and wouldn’t need to move my belongings into storage. My solicitor is saying this is virtually impossible and I would need to finalise my sale first. I understand how that is more straightforward but is my preference really impossible? He has been vague as to the reasons. Is he right? Or can it be done and if so how? Has anybody experience of this?

Secondly, the solicitor for the house I am buying is asking for the full 10% deposit when contracts are signed. Since most of my money is tied up in my current house, I don’t have easily access to this much in cash. Again my solicitor is shrugging his shoulders and saying “find it” whereas my mortgage broker says usually the solicitors will negotiate a lower deposit in these situations. I’ve already paid 2% as booking deposit and could easily stretch to another 4% in cash but reaching the full 10% will be difficult.

Do I just have a useless solicitor? It doesn’t feel like he’s acting for my interests at all and seems to be making life convenient for everyone else in the chain bar me! Or are my expectations wrong?

Thanks

We are in pretty much the same position! We are selling ours to first time buyers and are buying a house that is rented so a very short chain.

We informed our solicitor that we paid the 5k deposit and could probably come up with another 5 or 6k (which would bring us to approx 5% deposit) if needed and he said it's not unusual and he can't see a problem with a lower deposit, even just the 5k, when contract is signed and he was mentioning it to the other solicitor the last I heard about it.

As for closing and moving on the same day although it's not impossible it's very improbable. To pay for the house your solicitor needs funds cleared from the sale of your house, to do that the house needs to be vacant so you can't be in it. We are hoping to move out in the morning, give keys to estate agent and pick up new ones that evening but it can come down to something as simple as solicitors having different banks and funds not clearing quickly. We've made a plan B and it's a plan I would prefer but husband doesn't like, moving in with my family for a week and giving ourselves a day or 2 to clear out the house and get removal in. Keep stuff in storage for the week and then move to new house.

We will see how it all plays out!

Do your sale complete and moving dates have ti coincide

TradingUp

Thanks for all the replies; you are all much better communicators than my solicitor!

Some points - my mortgage letter says as one of the conditions that my current property is “sold prior to or simultaneously with the purchase of the new property” and references an approx sale price (which is actually a good bit lower than our sale agreed price). So there doesn’t seem to be a problem on the Simultaneous part from the side of the mortgage.

I had also understood that there is usually a significant gap between contracts being signed and the 10% deposit, and the actual closing of the sale and handing over the keys? Does anyone have a timeframe? But I would think this would be even more difficult especially if I can’t use my purchasers 10% deposit to offset in any way. My parents have kindly offered to loan me the deposit money if needed, but I know this can complicate things with regard to the proof of source of funds for the mortgage, who won’t want to see a large new debt appear. Would we have to pretend it was an unconditional gift which would then have potential tax implications too?

I wish I could lay my hands on a good step by step guide as I’m sure I’m not the first person to be in this situation. Anywhere I’ve looked seems to gloss over this part is the process. I also wish I’d chosen a solicitor who can explain things more clearly!
Would anybody be able to talk me through the rough steps and timeframes for each stage?

TradingUp

Thanks also for the idea about pre-moving stuff into the new house but I suspect the sellers (and their solicitors) would refuse. I know I would if on the receiving end.

I just fear that it will end up doubling my removals costs - pack up from my house, move to storage, pick up from storage and move to the new house is a lot more involved than a simple point-to-point move. Ah well.

cubatahavana

TradingUp wrote: »

Thanks also for the idea about pre-moving stuff into the new house but I suspect the sellers (and their solicitors) would refuse. I know I would if on the receiving end.

I just fear that it will end up doubling my removals costs - pack up from my house, move to storage, pick up from storage and move to the new house is a lot more involved than a simple point-to-point move. Ah well.

PM me with any questions. I sold an apartment in the morning and bought a house in the afternoon. Stressful? Yes, but very doable. I think your solicitor should be able to negotiate a reduction on the deposit

astrofool

We bought and sold on the same day, we "sold" at 11am, and "bought" at 12pm, our solicitor had everything organised so that money would be in the correct place at the right time.

I was mentally prepared that we would have to organise a hotel and storage after moving out, but everything went smoothly, the properties were fairly high value.

I would be prepared to talk to another solicitor for advice if your current one is saying it's impossible, but do expect to pay the appropriate costs to the solicitor for arranging this. In our case we did have the full 10% available, so didn't hit any issue there.

Other options are sell, rent, buy; sell, hotel, buy; bridging loan.

It also seems you're finding all this out quite late, having all of this called out before even putting our own house up for sale helped a lot, and everyone knew what to do as time moved on.

3DataModem

It is extremely difficult to sell, drawdown, and buy on the same day. It used to be easier when everything was done with bank drafts, but because everything is bank transfers nowadays then there is a few days clearing time for the various funds.

We did the best we could, but had to move into a friends (thankfully empty) house for a few days. It was fine, we were prepared to airbnb if needed.

Meeoow

I did exactly same as you, OP.
I sold mine and bought current house on same day.
I only needed to put 5000 deposit down.
I really don't know why your solicitor is advising you to do this on separate days. There should be no need.
If you are using estate agents to sell your house, they will have vetted the buyers to ensure their mortgage is sorted.

hao123

We traded up, and we tried to close the sale and purchase on the same day. But now it seems inevitably we need to live in Airbnb for few days due to the delay in snagging as we bought a new build.

Regardless it’s doable move out and move in at the same day and also should be ok to pay less than 10% deposit on signing the contract, just ask your solicitor to give it a try.

Dolbhad

It can be done but very hard to balance both on same day.

Reason is usually banks. Some loan offers say current mortgage needs to be cleared before drawing down funds, it won’t be a same day.
If your loan offer says unconditional contracts needed for drawdown but your purchaser has a subject to loan clause, then it’s conditional contracts and you can’t drawn down until you sell.

Bridging loans don’t happen anymore.

Even if you you get over this hurdles you need three set of solicitors to Be organised and ideally have funds clear in two or three bank accounts which no one can control.

Smiley11

TradingUp wrote: »

Thanks also for the idea about pre-moving stuff into the new house but I suspect the sellers (and their solicitors) would refuse. I know I would if on the receiving end.

I just fear that it will end up doubling my removals costs - pack up from my house, move to storage, pick up from storage and move to the new house is a lot more involved than a simple point-to-point move. Ah well.

I don't have any experience of this but you do end up in the predicament of having a couple of days crossover, I'd suggest renting a large van & load up your possessions. Then park it up in the driveway of a friend/relation/air bnb's driveway until you're good to go. I'm guessing rentals aren't overly expensive in this climate & it might save you a lot of expense or inconvenience. I know the storage unit we have is absolutely wedged & the prospect of filling & emptying that in quick succession is horrific...then again its always worth the stress when its over!

annoyedgal

Yes you can buy and sell on the same day. Our solicitor suggested it! We borrowed from family to cover the deposit on the house we were buying.
Highly stressful in the run up but we handed over keys in the morning and had keys for new house after lunch.
Loaded up moving van and unloaded in same day. Had a back up plan to stay in hotel if anything got delayed and had a bag ready for an overnight or two just in case.

goingagain

We just bought and sold yesterday in a very similar chain as you.

Closed our sale around 11 and our purchase was completed by 4.

We didn’t have the deposit issue but my solicitor told me a reduced deposit was common in cases were a person was trading up.

For mortgage, they will only want a signed contract before drawdown they don’t it to be completed. They asked my solicitor to provide a letter to say the funds from my sale were to be used for my purchase

We did have a small problem in that the 3 solicitors were different banks, which would have made the transfers more difficult. Our buyers solicitor transferred the money to our solicitor the day before closing to make it possible for both sales to complete on the same day.

We did have a plan B , if our keys didn’t come through. But thankfully I am now sitting in my new house having a glass of wine 😂

Meeoow

goingagain wrote: »

We just bought and sold yesterday in a very similar chain as you.


We did have a plan B , if our keys didn’t come through. But thankfully I am now sitting in my new house having a glass of wine 😂

Fair play to you having a glass of wine. The day I moved, I planned the same, but was too wrecked. One of the most stressful days ever for me!

poker--addict

Even the best plans in the world can hit speed bumps, and speed bumps in those process are not unusual. Ours was not complicated but a paperwork delay and double booked removal van saw ours delayed 3 days, luckily neither party had boxed themselves into a corner.

TradingUp

goingagain wrote: »

We just bought and sold yesterday in a very similar chain as you.

Closed our sale around 11 and our purchase was completed by 4.

We didn’t have the deposit issue but my solicitor told me a reduced deposit was common in cases were a person was trading up.

For mortgage, they will only want a signed contract before drawdown they don’t it to be completed. They asked my solicitor to provide a letter to say the funds from my sale were to be used for my purchase

We did have a small problem in that the 3 solicitors were different banks, which would have made the transfers more difficult. Our buyers solicitor transferred the money to our solicitor the day before closing to make it possible for both sales to complete on the same day.

We did have a plan B , if our keys didn’t come through. But thankfully I am now sitting in my new house having a glass of wine 😂

Oh congratulations and good to know that this is possible. Sounds like your solicitor is great at looking out for your interests

Do you mind me asking if your mortgage is with Avant? And could I please also ask what your Plan B was? I’m wondering is it possible to provisionally book storage etc without a firm plan or did you just mean some arrangement with family or friends?

Best wishes with the new house!

annoyedgal

The moving company we used agreed to store our things if something went wrong on the day and there was a delay. Obviously there is a cost for this but was good to know it was an option.
Made sure there was availability in a local hotel, packed an overnight bag for two nights or so and that was our plan b.