House Buying Question

MoneySavingMumof2

I am in the process of buying a house.

I was today informed that the valuation has been done and that my case is going to mortgage offer.

My solicitor has been on the phone saying that he has the contracts and could I make an appointment to see him to discuss.

My question is: Ive read somewhere that when I sign the contract I am supposed to give my solicitor a 10% deposit. Is this 10% of the asking price of the house, or 10% of the solicitors overall fee? And what is this 10% for? Is it to guarantee the house, and does it get taken off my mortgage?

Because, if it is 10% of the asking price, where am I supposed to get that sort of money from? I do not have that kind of cash lying around... What happens if I can't afford to pay the 10%, do I lose the house?

Someone please advise. Sorry for all the questions, very confused and very scared at the minute.

Thanks

~Beanie~

MoneySavingMumof2 wrote: »

I am in the process of buying a house.

I was today informed that the valuation has been done and that my case is going to mortgage offer.

My solicitor has been on the phone saying that he has the contracts and could I make an appointment to see him to discuss.

My question is: Ive read somewhere that when I sign the contract I am supposed to give my solicitor a 10% deposit. Is this 10% of the asking price of the house, or 10% of the solicitors overall fee? And what is this 10% for? Is it to guarantee the house, and does it get taken off my mortgage?

Because, if it is 10% of the asking price, where am I supposed to get that sort of money from? I do not have that kind of cash lying around... What happens if I can't afford to pay the 10%, do I lose the house?

Someone please advise. Sorry for all the questions, very confused and very scared at the minute.

Thanks

It is 10% of the cost of the house.

Are you a first time buyer or are you selling yours and buying another? If you are a first time buyer then you should have saved a deposit, how did you get a mortgage without one? If you own a house already, the equity in that is used as the deposit and therefore you don't have to hand over the 10% at that stage.

silvercar

Presumeably you have agreed a price with the seller and applied for a mortgage of a certain amount. Your deposit is the difference between the two. If this is less than 10% of the agreed price, your solicitor will try and get the seller's solicitor to agree a lower deposit.

Your solicitor needs to have the deposit before exchange on contracts; even if you sign the papers at the next meeting, you won't be actually exchanging until all the paperwork is complete and everyone in the chain is ready.

MoneySavingMumof2

Thanks for your replies.

To give you more background: I am in the process of separating from my husband. He is staying in the marital home, and remortgaging to release the equity, which we are splitting between us. With the amount I get from him, I am putting down £40k deposit on the house I am hoping to buy.

Do I still need to hand over the 10% deposit at this stage, and if so, how can I if I havent received the money from the equity of the marital home yet? (Husbands remortgage of marital home is still ongoing).

Do I get this 10% money back? Is it taken off the mortgage? I cant remember what we did when we bought our marital home, it was a long while ago.

Any advice would be great.

poppysarah

You'd be best speaking to your solicitor about the process. They should be able to give you an idea of how much and when.

sarah_elton

Forget the figure 10%. That just refers to the most typicaly deposit amount - 10% of the purchase price. Your deposit is £40k. What percentage it is depends on the house you're buying. If it's £200k, your deposit is 20%. £300k, 15%. Only if it's £400k is it 10%.

The £40k is the amount that gets handed over at exchange. Since that money is being paid to you by your hubby when he re-mortgages, I'm not sure how you tie up the dates. Someone else will come along and explain that part shortly. But you don't get the money back. Basically, on exchange day you give the seller £40k. On completion day they get the rest - i.e. the money from your mortgage company. Also on completion day you'll pay your solicitor's bill and stamp duty.

Exchange can only happen once all houses in the chain are ready to do it. And everyone hands over their deposit on that day. Your solicitor will want your contract signed so he/she is ready to exchange when a date is fixed.

You then set a completion date that everyone in the chain agrees with, which is the date when you all hand over the rest of the money (i.e. your solicitor gives your mortgage amount to your seller's solicitor) and get your keys.

EDIT: poppysarah replied while I was writing this. The above should give you some background to understand the process and what your solicitor is saying to you, but do call them.

pinkshoes

I would say that until your ex husband remortgages the home, then you don't actually have a deposit, and probably aren't in a position to buy a house yet.

What does your mortgage agreement say? i.e. are you borrowing 90% of the value, and you providing a 10% deposit.

The whole idea of paying 10% on exchange of contracts is so that if you pull out, the vendor doesn't lose out, and they keep your 10% I believe. (So no, if you exchange contracts and don't complete, you will lose your 10%).

Mutton_Geoff

Forget the figure 10%. That just refers to the most typicaly deposit amount - 10% of the purchase price. Your deposit is £40k. What percentage it is depends on the house you're buying. If it's £200k, your deposit is 20%. £300k, 15%. Only if it's £400k is it 10%.

The £40k is the amount that gets handed over at exchange. Since that money is being paid to you by your hubby when he re-mortgages, I'm not sure how you tie up the dates. Someone else will come along and explain that part shortly. But you don't get the money back. Basically, on exchange day you give the seller £40k. On completion day they get the rest - i.e. the money from your mortgage company. Also on completion day you'll pay your solicitor's bill and stamp duty.

I'm afraid that is wrong. 10% is normally due on exchange but that can be lower subject to discussion with solicitors. If the house is costing £200k (with £40k cash and £160k mortgage) then 10% ie £20k is due on exchange and the balance on completion. Your solicitor should have funds available for completion, so a transfer from the mortgage company of the £160k loan plus the other £20k (which you've kept on high rate deposit til that day).

You certainly don't need to pay any more than 10% of the purchase price to exchange however cash rich you are at that time!

You also don't decide the completion date after exchange, but prior to it! The completion date is an important part of the contract you are entering into!

Feefee_4

Hi,

When iI purchased the house i'm in although i was putting a cash sum down to go with the mortgage I was never asked for a deposit for the exchange. Nor have i ever been asked for one in the past, it has alway just gone through on the completion date. maybe i was just lucky.

Feefee

Richard_Webster

Mutton Geoff is talking sense.

However, if the valuation is just being done you would not be ready to exchange until the formal offer has been received. Also you will need to wait until the £40K from your husband comes through.

Didn't you tell your solicitor that you would be waiting for that money? You can't go ahead without it so the whole process is stalled until it comes through.

Why then run up legal costs in seeing your solicitor until you know you can go ahead when you have both mortgage offer and money from your husband?

sarah_elton

With apologies for the incorrect info earlier...