confused?????

pilts15

will try to explain best i can......our financial advisor just called to tell us our buyer wants to exchange on a 5% deposit (we are almost ready for exchange) so advisor contacted the estate agents we are buying from to see if ok...they contacted the bank that reposessed the property(which we are buying) they said no,a minimum of 10%. firstly i dont understand this exactly and secondly we are right at end and close to exchange. can someone please explain in a way we could understand...totally not clued up in all this sort of thing!:eek:

jonewer

Just to clarify...
The person who is buying your house wants to lodge a 5% deposit
The house you are buying is a repo and the bank wants a 10% deposit from you
?

pilts15

yer we are buying a repo,we are actually putting 25% on it. our buyers were putting 10% down but asked today if they can drop to 5% dep. cant understand why it was put to the bank that took repo,has it anything to do with our buyers etc and how can this effect us???

jonewer

Does sound very odd.... Do you have a solicitor acting for you? Maybe they can advise.

pawpurrs

So you have 25% cash to put down not equity from the sale of yours?
What normally happens is the ftbers at the bottom put down the deposit and it is passed up the chain so the deposit gets smaller the higher up it goes, the bank are saying they want 10% so you have to find that in cash to deposit, minus the amount your buyers are putting down, which depending on the price difference could be a varying amount.

pilts15

just contacted solicitors and they explained that too. just worried now that so close to the end they are asking to put down 5% and not 10% which they agreed.i do hope they dont pull out!

pawpurrs

Please dont worry, perfectly normal to only put down 5%, if they were going to pull out they wouldnt be discussing deposits. They would still be liable for 10% if they pulled out between exch and completion, just get exchnaged! So you have the cash to put forward for the deposit then?

pilts15

not cash.....40000 in equity which is being used for the deposit..fingers crossed all goes well!

G_M

Your confusion comes from the fact that 'deposit' has 2 quite different meanings:

1) When people apply for a mortgage, it is normal to need a 'deposit'. So if you are paying 100K for the house and have a 25% 'deposit' that means you pay 25K and the bank lends you 75K (your mortgage).

2) At Exchange of Contracts it is normal to pay a 'deposit' to the seller (or his solicitor). Usually 10% of the purchase price (not the mortgage), but often by agreement it can be less (eg 5%). This has nothing to do with the 'deposit mentioned in 1) above! So if the property price is 100K, you pay 10K deposit at Exchange, and then the rest (90K) at Completion.

In your case it sounds like your buyer wants to pay you 5% deposit at Exchange (instead of 10%). Normally, the deposit you receive from your buyer at Exchange is used by you to pay the deposit you have to pay to your seller. But if you are receiving only 5% deposit, but the bank you are buying from insists on 10%, then clearly you have more cash to find yourself at Exchange of Contracts.

This does not affect the total amount you receive, or pay, on your sale/purchase, since at Completion you will receive the outstanding 95% of the purchase price, and pay the outstanding 90%.