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  • FIRST POST
    • ravenmoon36
    • By ravenmoon36 8th Jul 17, 5:56 PM
    • 13Posts
    • 1Thanks
    ravenmoon36
    Deposit for exchange of contracts when deposit is coming from a remortgage
    • #1
    • 8th Jul 17, 5:56 PM
    Deposit for exchange of contracts when deposit is coming from a remortgage 8th Jul 17 at 5:56 PM
    Basically, we are purchasing a house on a 2nd home mortgage for my mum to live in, to give her some security finally, as we found out recently our house has gone up quite significantly in value. We are sourcing the deposit through remortgaging our current house to release some of the equity. We have had the 2nd home.mortgage officially approved and they are just awaiting a completion date and are awaiting official offer for the remortgage, which we should get next week. Unfortunately the two are out of sync, as we were messed around by our current mortgage provider, so are remortgaging with another bank.

    The seller has contacted us asking if we would be ready to exchange contracts next week, but to do this we have to put down a deposit of £22,500, according to our solicitor, but we won't have this money until our remortgage goes through, and even then, I don't know how the funds will be released, for example, they may only be released upon the completion day, so not in advance so we can pay this.

    I have tried to do some research online, but as our deposit isn't coming from selling our property to someone else (and therefore us using their deposit to us to fund our deposit to the seller) I can't find any information about our circumstances. In our situation does actual money have to be exchanged, or as the deposit is also coming from a mortgage (albeit a remortgage), is there a different circumstance for people in our situation, such as our mortgage offer and it written into the contract that we owe the seller the 10% should we pull out?

    I have looked into bridging loans, but would rather not go.down that route!

    Any advice you might be able to provide would be great. Thanks!
Page 1
    • Thrugelmir
    • By Thrugelmir 8th Jul 17, 6:07 PM
    • 54,402 Posts
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    Thrugelmir
    • #2
    • 8th Jul 17, 6:07 PM
    • #2
    • 8th Jul 17, 6:07 PM
    You'll need to find the funds to exchange contracts.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • AnotherJoe
    • By AnotherJoe 8th Jul 17, 11:25 PM
    • 6,912 Posts
    • 7,356 Thanks
    AnotherJoe
    • #3
    • 8th Jul 17, 11:25 PM
    • #3
    • 8th Jul 17, 11:25 PM
    I dont see why the fact that deposit is coming from a remortgage is relevant at all.

    For sake of argument, you might end up with a £100k mortgage and 22k cash.
    Or you might already have had a £100k mortgage and £22k cash. In either case the only difference is the delay in releasing the £22k.

    If you haven't arranged your remortgage in time enough to provide that £22k as a deposit, the solution seems to be either to have the seller wait for exchange until the money comes through or use a bridging loan.
    • theoutdoorman
    • By theoutdoorman 9th Jul 17, 6:24 AM
    • 6 Posts
    • 1 Thanks
    theoutdoorman
    • #4
    • 9th Jul 17, 6:24 AM
    • #4
    • 9th Jul 17, 6:24 AM
    I have never actually had to pay a deposit on exchange - if the property you are buying is empty you could ask your solicitor to exchange and complete on the same day.
    • PField
    • By PField 9th Jul 17, 8:03 AM
    • 28 Posts
    • 16 Thanks
    PField
    • #5
    • 9th Jul 17, 8:03 AM
    • #5
    • 9th Jul 17, 8:03 AM
    Your solicitor should be able to sort this out for you. Usaually a reduced deposited will be fine ( like moving the deposit up a chain). Do you have the money for the stamp duty( I guess this is +3% as it's a second home) That can be used towards the stamp duty and replaced when the remortgage comes through.
    • AnotherJoe
    • By AnotherJoe 9th Jul 17, 9:03 AM
    • 6,912 Posts
    • 7,356 Thanks
    AnotherJoe
    • #6
    • 9th Jul 17, 9:03 AM
    • #6
    • 9th Jul 17, 9:03 AM
    I have never actually had to pay a deposit on exchange - if the property you are buying is empty you could ask your solicitor to exchange and complete on the same day.
    Originally posted by theoutdoorman
    i suspect you have but it was the deposit you received from your sale being passed up the chain. Not the case here.

    Exchange and complete same day still requires the OP to have the deposit as ultimately it's part of the purchase price !
    • kingstreet
    • By kingstreet 9th Jul 17, 11:14 AM
    • 31,620 Posts
    • 16,891 Thanks
    kingstreet
    • #7
    • 9th Jul 17, 11:14 AM
    • #7
    • 9th Jul 17, 11:14 AM
    You need the remortgage to complete before you can exchange contracts on the purchase.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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