10% deposit problem

silvercar

We are in a chain. Our sellers (moving to rented) are insisting on a 10% deposit. Our buyer can only muster up 5% deposit as they will be on a high percentage mortgage. We cannot afford the difference between 10% of the house we're buying and 5% of our house.

We all agree that we need at least 2 weeks, possibly 4 between exchange and completion minimum.

What do we do?

mountainofdebt

a sign of your intentions to buy the house? What are they giving you as a sign of their intention to keep up their side of the bargain?

Why are they asking for such a high deposit as I presume they won't be able to get their sticky mitts on the money anyway until the completion date?

crankup

Is this in the UK?
I've never known of upfront deposits in a typical chain before. I think I'd be reluctant to get involved in deposits. You might end up being out of pocket through no fault of your own.
Maybe if everyone in the chain put in an equal deposit, certainly not a percentage, but I'd play the standard waiting game if iwy.

Bossyboots

crankup wrote:

Is this in the UK?
I've never known of upfront deposits in a typical chain before. I think I'd be reluctant to get involved in deposits. You might end up being out of pocket through no fault of your own.
Maybe if everyone in the chain put in an equal deposit, certainly not a percentage, but I'd play the standard waiting game if iwy.

This is the way it is done and always has been done. The solicitors retain the deposit until completion unless there is agreement for the deposit to be passed up the chain but even when it gets to the end, it is not release to the vendor.

The only advantage to the top of the chain here in seeking a 10% deposit is that if you fail to complete they have more cash in hand, rather than having to sue you for it. Tell them the situation and that you will have to pull out if they do not accept 5%. You do of course need the permission of your buyers to use their deposit as your own and they are quite entitled to say no. You would therefore still be needing to finding 5% anyway in that situation if you can persuade your vendor to agree the lower deposit themselves.

silvercar

Their solicitor has said the vendor will require the normal 10% deposit.

As for passing money up the chain we should be able to do that as we are buying the smallest house in the chain as a BTL (due to their original buyer dropping out) so we will give permission for that to be passed up the chain and will know the exact amount of that. The house we are buying is almost twice the value of our current house so there is always going to be a difference.

I wonder if our seller thinks he can use our deposit as a deposit on his rental?

What are they giving you as a sign of their intention to keep up their side of the bargain?

Nothing! but what could they give?

Bossyboots

silvercar wrote:

I wonder if our seller thinks he can use our deposit as a deposit on his rental?

That is exactly the thought that crossed my mind. I am sure I don't need to advise you that if it is suggested, you would be very unwise to say yes.