Monies in place before exchange of contracts?

lynneinjapan

We're just about to exchange contracts on a house, with a planned completion date of 14th Oct, but our vendor has called today to say that their solicitor has told them they can't exchange contracts until all the monies are in place. Is this normal? I thought we only had to get the money to the solicitor's account before completion? In good moneysaving tradition, we were going to hang onto the money and keep getting the interest on it for as long as possible before transferring it over to arrive on the 13th.

We've already transferred £40K over to our solicitor (by BACS, but I know they have received it), and have the rest all lined up so we can send the cash part by CHAPS on Monday if we need to, but the mortgage will take about 3 working days to process. (I have told the solicitor that everything's in place, but they haven't seen any written proof.) When I spoke to the solicitors who are dealing with the mortgage earlier today (the finance is coming from a BTL mortgage on our current property so it's a different solicitor), they didn't seem to anticipate any problem with just transferring the funds across for the 13th to allow for completion on the 14th.

It wasn't until after both solicitors had shut up shop for the weekend that I spoke to our vendor, so I haven't been able to ask them for their viewpoint.

(No mention has ever been made of a deposit, but even if it was required, surely £40K should be plenty on a £242K house?)

silvercar

We never paid more than the deposit until just before completion.

Theoretically, the solicitor can't draw down the mortgage money before he knows that he will be able to register the mortgage lenders charge on the property. So he needs to be confident that you have the money to complete. (Actually he can always send the money back so its not 100% essential.)

Why would anyone exchange with no prospect of being able to complete?

Your own solicitor should be happy you have the mortgage offer in writing before exchange, but apart from that you don't need to pay anything other than the 10% deposit over.

jenny74

silvercar wrote: »

We never paid more than the deposit until just before completion.

Theoretically, the solicitor can't draw down the mortgage money before he knows that he will be able to register the mortgage lenders charge on the property. So he needs to be confident that you have the money to complete. (Actually he can always send the money back so its not 100% essential.)

Why would anyone exchange with no prospect of being able to complete?

Your own solicitor should be happy you have the mortgage offer in writing before exchange, but apart from that you don't need to pay anything other than the 10% deposit over.

Silvercar, how deos it work if the deposit for the purchase is inthe form of equity from the sale of another property?

with our mortgage and equity there is a shortfall of £2k on the purchase which we will make up with our savings. Do you know if we are going to be expected to pay this at exchange or completion?

Thanks (and sorry for hi-jacking, op!)

Jenny

G_M

with our mortgage and equity there is a shortfall of £2k on the purchase which we will make up with our savings. Do you know if we are going to be expected to pay this at exchange or completion?

You will not get access to the mortgage funds till Completion. You will therefore need to pay the deposit on your purchase from a) any deposit you receive on your sale b) your savings or c) by taking out a loan/credit card etc

Or try negotiating a lower deposit. This is often done.

terrierlady

Lots of people now a day pay 5% on exchange although the contract usal states 10%, just ask your solicitor to inform the vendors solicitor most are ok with this.

silvercar

Deposits pass up the chain, so your buyers deposit becomes part of your deposit and so on.

Sometimes people can't produce the full deposit and most people agree that a smaller deposit is acceptable.

Occasionally someone can't find any deposit (common with 100% mortgages) and there is little option but to exchange and complete onthe same day.

lynneinjapan

Thanks for your help folks.

According to our vendors' solicitor, the funds have to be cleared six working days before completion. Sounds a bit dubious to me, but for the sake of a week's interest vs potentially lots of stress, I think we might as well just hand the lot over straight away.

silvercar

Well your solicitor won't hand over anything other than deposit until completion day, so the vendor's solicitor is barking up the wrong tree.

bitsandpieces

I suspect you're right about when funds (don't) need to be in place. Arguing could lead to weeks of hassle, though - I think it might be worth acquiescing just to save strife!

lynneinjapan

Our vendors are paying nearly £70K more for their new place than we're paying them, and I'm sure they're making up the difference without a mortgage - they told us they've already transferred their money over - so they don't need anything from us towards their deposit. When the contract came through from our solicitor yesterday for signing, our solicitor just asked for written confirmation that the full funds for the purchase would be available by the completion date, and that we agreed with that date for completion... so it seems to be our vendor's solicitor who's being very cautious (or money-grabbing? You can get quite a lot of interest on £200K+ in a week!).

We're going to transfer the money over ASAP anyway, just for the sake of a quiet life - the cash element will go by CHAPS on Monday and I'll ask the mortgage people to process the mortgage ASAP, which should mean the money is all with the solicitor by the end of the week.

Now we need to sort out buildings insurance (got to be a landlord policy as we need to stay where we are until the spring for school application reasons so will be renting it out at first) - are we liable from exchange of contracts onward or only after completion, does anyone know? - plus gas safety certificate and a new cooker (the vendors are taking their big range cooker with them).

silvercar

Now we need to sort out buildings insurance (got to be a landlord policy as we need to stay where we are until the spring for school application reasons so will be renting it out at first)

Do you have your new mortgage lenders consent to let?

Try directlineforbusiness or allanboswell for BTL building insurance.

are we liable from exchange of contracts onward or only after completion, does anyone know?

Insure from exchange for peace of mind.