Will I still need to pay a deposit to the solicitor

dfarry

Hi all...

There is probably a completely obvious answer to this but...

I plan to sell my house and will have about £150K equity...

I then plan to buy a new house and will need to borrow about £150K - the purchase price being £300K...

At exchange of contracts will I still need to pay a deposit to the solicitor e.g.... 5% of £300K = £15000!!:eek:

I could never afford to find that amount of cash upfront like this... wont the equity effectively be my deposit that the solicitor uses as my promise/commitment to buy the new home?


Help please.... otherwise I may as well give up the whole house buying plan.

silvercar

Normally you pass the deposit you receive on your house sale up the chain as a deposit on your purchase.

If you can't come up with any more cash your solicitor either needs to negotiate a reduced deposit or you need to exchange and complete at the same time.

livinginhope

Stop worrying,the deposit will be on the strength of the equity,you will not have to actually hand over the 15k.I admit to feeling concerned when we sold our first house,but 9 sales later I haven't payed a penny.Good luck!

JennyW_2

as the others have said, the deposit will come from the equity in your property. We're currently selling and buying and I've only paid £147.00 for searches. All my fees will also come from our equity.

dfarry

Thanks for the advice all...thats a big relief!

AndrewSmith

It is perfectly normal and acceptable for all the deposit and solicitors / Estate Agency fees to be funded from the proceeds of your sale.

The only fees payable are those such as you have already paid, ie searches, lenders valuation etc.

Andy

RiskAdverse100

I do not agree that it is 'perfectly normal and acceptable' for no deposit to be paid on exchange.

When dfarry exchanges contracts on the sale no doubt the buyer will be expected to pay a deposit. This can be used by dfarry as part, if not all, of the deposit payable on the purchase.

I don't know the sums involved but you can often rely on the deposit you are getting on a sale to fund all the deposit payable on the purchase.

This could mean insisting on getting a full 10% deposit from the buyer and agreeing a 5% deposit on a purchase.

Sellers like getting deposits. It is their insurance that the buyer is serious and, having exchanged contracts, is going to complete. With no deposit at all a flaky buyer is more likely to pull out of a deal even if this could mean being sued for damages etc.

RiskAdverse100

clairehi

RiskAdverse100 wrote:

you can often rely on the deposit you are getting on a sale to fund all the deposit payable on the purchase.

This could mean insisting on getting a full 10% deposit from the buyer and agreeing a 5% deposit on a purchase.


RiskAdverse100

but what if you are selling to a FTB who only has a 5% deposit, and you yourself are trading up and so your deposit is much higher?

In our case, there would have been a difference of £27K between the deposit we had to pay and the deposit we were receiving.

in our case we broke the chain by renting so we had the cash in the back to pay the deposit, but what does everyone else do?

Ems*Honie

I find it very hard to believe that the there are large amounts of people with enough cash to pay a deposit in that way Riskadverse, particulary those in a chain, tecnically it would mean the first person in the chain has to stump up the cash, and then you all just pass it along!

dfarry

Ems*Honie wrote:

I find it very hard to believe that the there are large amounts of people with enough cash to pay a deposit in that way Riskadverse, particulary those in a chain, tecnically it would mean the first person in the chain has to stump up the cash, and then you all just pass it along!

Yes indeed.... the priniciple seems reasonable and would help to ensure some commitment.... but a single breakdown in the deposit chain would presumably cause all sorts of problems...

Also seems a good opportunity for over complicating matters and solicitors gain interest.... that then has to be claimed back by the Inland Revenue. When I was a FTB I did pay a 5% deposit (about £2000)... from what I remember this was passed onto the sellers solicitors.

silvercar

If your moving up you take your buyers deposit and top it up. Not unreasonable to think that if you bought your house with say a 90% mortgage and are no moving to somewhere more expensive, you'll still find a 10% deposit yourself so should be able to find the difference between the deposit you receive and 10% of the place your buying.