Deposit on exchange

newtoitall

We we selling our house and buying another. On the exchange of contracts it mentions putting down a deposit. Do we have to provide this deposit seperately or does it come from our mortgage? Sorry if this dumb.

Seen some conveyancing web sites that mention using a "bridging loan".

goldbyron

It is seperate and usually 10% but 5% can often be negotiated. In the days of 100% mortgages things were a little different with very small amounts sometimes agreed upfront. A bridging loan is usually for sales that fall through or can't exchange at the same time to prevent the chain collapsing and not deposits. In your case the deposit will be from your buyers and go up the chain....your vendor will indicate if they will accept that amount.

firstaspect

If you are buying and selling then in most cases the deposit will just pass up the chain (so your buyer's deposit will become your deposit).

sonastin

If I understand correctly, if all of your deposit is tied up in the equity in your home then the "deposit" that goes up the line at exchange is actually your buyer's deposit plus an undertaking from your solicitor that you are good for the rest if your buyer's deposit doesn't match the 10% or whatever you are supposed to pay. I might have got that wrong but I don't think you are suddenly expected to find the extra cash to tide you over between exchange and completion.

newtoitall

Thanks for all the reponses.

Richard_Webster

Basically the comments made are right.

It is a question of common sense and proportion. A seller will want a deposit that is big enough to discourage a buyer form running away. If you were selling for say £100K and buying for say £800K then you seller might think that a £10K deposit wasn't enough!

In most cases there isn't this level of disparity and the buyer's deposit is often more than 5% of the onward purchase price. Sometimes you might be asked to add what you could, but most of time the buyer's deposit is eventually accepted.

The point is that the size of the deposit actually paid is really only going to be an issue if completion doesn't take place at all, which fortunately is pretty rare - although we seem to have an example in another thread on this broad at the moment!

However in most cases it will be thought more important to exchange than spend another week or more trying to persuade someone to produce some more money. If there is any length of chain the chances of someone in the chain deciding in the meantime not to proceed for some unconnected or personal reason, such as a family bereavement, are probably greater than completion failing to take place after exchange.