Exchange of Contracts - 10% deposit

delmar39

We are 4 weeks away from completing on our house sale and we're trying to exchange contracts asap. As I understand it we have to pay a 10% ish deposit on exchange. Do we have to find this money ourselves or does it come out of the mortgage offer?

carlsberggal

Yes your right the money has to come from you not the lender unless you are getting a 100% mortgage which is unlikely in these times. Your solicitor should have checked that you have the funds available in order to purchase. The deposit has to be cleared funds, so you need to lodge the money with your solicitor before you can exchange.

Fire_Fox

It doesn't have to be a 10% deposit on exchange, it can be 5% if all parties agree but that needs to be in cleared funds so is quite separate to your mortgage. If your mortgage is 95% (fairly unlikely in the current climate) then you would have to offer 5%. Presumably your conveyancing solicitor knows where all your funds are coming from?? If your savings are tied up you need to release the ASAP.

delmar39

Hmmmm I thought this might be the case just an oversight on my part. We have a 35% deposit so could do the 5% option. Let me get this straight. If we just proceed on the sale of our property to exchange of contracts is it not just the buyer who has to put down a deposit? We've already paid a deposit to our builder to secure our new place, so we don't need to secure it.

pie81

I don't understand, are you buying or selling or both?

You will need to pay a deposit when buying (not when selling) of 5% or 10% (depending on what your seller will agree to).

Fire_Fox

I now have no idea which part of the deal you are talking about - rather than saying 'our' house/ property can you rephrase the thread and talk about the house you are buying and/ or selling?

goldengirl28

how does this work if your selling your home and the deposit is coming from the house sale?

Fire_Fox

The whole chain exchanges on the same day and the deposit simply goes up the chain.

delmar39

OK let me make it clear. We are currently selling our property and in the process of buying another. So, in terms of our sale if we exchange contracts is it just the buyer who pays a deposit to us? In terms of our purchase we have already put a deposit down to secure it, so would be looking to exchange and complete on the same day (26th Feb) as we won't have the funds until we sell our current place. Question is, can we just exchange on our house sale? Sorry, I'm probably unclear because I don't know the process.

Fire_Fox

The best thing to do is to clarify with your conveyancing solicitor as what deposit is paid and when you exchange/ complete has to be agreed with your buyer and vendor. The buyer pays a deposit on exchange, you in turn pay a deposit to the vendor of your new place: money goes in one direction only. The holding deposit you have already paid may be sufficient to allow you to complete, or you may need to top this up, check with your legal representative. When you complete on any transaction the entire monies have to be paid, your old mortgage is then paid off. If you completed on your new property before you completed on your old property you'd have two mortgages running, and I doubt the lenders would be happy with that. So no, you need to complete on your sale before you complete on your purchase OR at the same time.

delmar39

Fire_Fox wrote: »

The best thing to do is to clarify with your conveyancing solicitor as what deposit is paid and when you exchange/ complete has to be agreed with your buyer and vendor. The buyer pays a deposit on exchange, you in turn pay a deposit to the vendor of your new place: money goes in one direction only. The holding deposit you have already paid may be sufficient to allow you to complete, or you may need to top this up, check with your legal representative. When you complete on any transaction the entire monies have to be paid, your old mortgage is then paid off. If you completed on your new property before you completed on your old property you'd have two mortgages running, and I doubt the lenders would be happy with that. So no, you need to complete on your sale before you complete on your purchase OR at the same time.

Thanks for this. I'll get in touch with our solicitor now that I'm a bit clearer. Our purchase is a strange one in that the house isn't on the market - we came across it through my brother in law who works for the firm building it (a local family firm) so for a small deposit the builder agreed that it would be ours for six months to give us time to sell, which we did. So, as things stand, we don't have to pay anything to secure it it's just a case of selling and paying full price. The builder isn't expecting us to do this until the 26th Feb, so I'm trying to get our sale secured asap so we can commit to getting the new place kitted out prior to moving in.