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Timing of deposit monies
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homerhotspur
Posts: 260 Forumite
My Son is about to buy his first house. The Solicitors appear to be asking for him to send them his whole deposit to them at exchange of contract time.( as opposed to completion) Is this correct as I thought he would only have to send them whatever is legally required at the contract stage(ie the non-refundable element (5 or 10%?) not his actual deposit which amounts to 25% of the purchase price. Please could someone clarify the position, are the Solicitors trying it on a bit to get the monies into their client account early?
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A 10% deposit (or other agreed amount) is due at Exchange of Contracts.
The remaining 90% (from him + his mortgage lender) is due at Completion.
If Exchange and Completion are taking place simultaneously, or within a short period, the conveyancer will prefer to have the full amount in good time, and sending it all at once is wise.
If there is, for example, a 6 week gap, there's no need to send the balance till later.0 -
Technically you only need to send the 10%. However:
Solicitors don't benefit by having the funds in their possession: The funds have to be kept in a segregated client account, so the solicitors can't use the money. Usually these accounts don't earn any interest, but even if they do, for the few days / weeks between exchange and completion, there would be negligible interest.
* Have you actually asked if you can pay 10% now and the rest later? (The solicitors may have just suggested one hit is easier but may be amenable to another arrangement)
* The solicitors may be trying to ensure everything is in place ready for completion, and there's only the mortgage to wait for, rather than rushing your remaining funds close to completion too.0
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