Deposit on exchange - help needed please

catloverbex

Hi all

I'm confused. We are buying a house for £180k. We have a 20% deposit sorted for the mortgage. I've now heard that we need a 10% deposit on exchange. Is this just paying over part of our existing 20% deposit? Or is it an additional 10%?!

If anyone could explain or assist me in understanding I would really really appreciate it!

Thanks!!

Catloverbex

tiny_tear

nothing to do with the mortgage deposit as that links to the LTV of the property.

on exchange you give 10%, that is it.
then on completion you give the rest - which in your case will be the mortgage and the extra 10% you have in savings.

simples!

catloverbex

Ah ok thanks. So in essence we don't need a penny extra. Lovely thanks!

tiny_tear

catloverbex wrote: »

Ah ok thanks. So in essence we don't need a penny extra. Lovely thanks!

well, you will also need the Stamp Duty (if it applies) and the Solicitor's fees (on completion), but other than that, yes, that is it...

catloverbex

Aw thanx tiny_tear. Yep we've budgeted in all our legal costs and stamp duty so looks like we're all set!

G_M

the confusion arises because there are 2 different types of 'deposit' being talked about.
When discussing mortgages, the 'deposit' is the cash/savings you are providing, with the balance being provided by the bank/building society.

When discussing conveyancing, the 'deposit' is the amount due to be paid at Exchange of Contract, with the balance beig paid at Completion.

The term 'deposit' has completely unrelated meanings in these 2 scenarios.

PasturesNew

£180k - house price
£36k - your deposit in savings
£144k - amount of mortgage arranged


At Exchange
£18k - 10% deposit required by your solicitor to enable exchange to happen.
£18k - remaining 10% of your deposit sits in your bank, waiting until your solicitor asks for it (some days before completion, so it's then in his bank as cleared funds on the completion day)

Completion Day
On the morning of completion you'll then have:
£18k - 10% deposit paid over at exchange
£18k - 10% rest of your deposit sitting at your solicitor's, waiting

Then in comes the £144k from the mortgage company.

Solicitor counts up the £18k + £18k + £144k = £180k, which he then hands over (completion) and the house is yours. You pick up the keys and move in.