5% deposit on exchange

arachne

So, we're all ready to exchange on the sale of our home and have just been told that the buyer only has a 5% deposit. Apparently we could chase him through the courts for the other 5% if he pulled out between exchange and completion but surely if he has no money, we wouldn't get it back anyway would we?? I'd have thought he'd just end up bankrupt and we'd get nothing (except keeping the 5% deposit).

I don't think we have much choice about proceeding, what with buyers being the rarity they are, but would appreciate hearing any other experiences, especially if they end up happy...

Thanks

PS - This won't affect our purchase of our next home as we can find the 10% deposit without relying on getting 10% from him luckily.

Gwhiz

If his mortgage Co are happy to give him a 95% mortgage then go ahead.

nancyo

Gwhiz wrote: »

If his mortgage Co are happy to give him a 95% mortgage then go ahead.

I dont think any Mortgage Co are happy to go ahead with 95% mortgage these days, your lucky to find one at 90%.

Terry_Winnan

5% is still a lot of money, so it shows enough commitment form the buyer to give you confidence to exchange. Especially as it won't affect your purchase deposit,

Go for it.

Richard_Webster

It is worth asking why he only has 5% - but remember that in the days when 95% mortgages were common if you were in the middle of a chain it was very common for the deposit to be offered on exchange to be 5% of the price of a property lower down in the chain - so the amount in itself is no big deal - but it is a bit cheeky of the buyer if he just want to save a few pennies of interest on the remaining money between exchange and completion.

BornAtTheRightTime

Some solicitors ask vendors to accept a lower deposit as a matter of course - ours did and our vendors agreed 7.5%. In our case it's not just pennies.

gunge

arachne wrote: »

PS - This won't affect our purchase of our next home as we can find the 10% deposit without relying on getting 10% from him luckily.

The 5% itself wouldn't worry me, since its enough to make sure the buyer takes things seriously. However, if you are in a chain and passing 10% up the line then I would have thought you risk a loss as a result of the buyer pulling out.

Your ability to complete will be dependent on your buyer. If you fail to complete your 10% deposit may be foreit but you only hold 5% from your buyer and would indeed have to pursue them for the additional 5% which you may never recover.

Make sure the deposit coming to you is in line with the the deposit going on. Agreeing with your seller to pass on 5% with a 10% obligation also wont save you, as I would have thought your seller could pursue you for their additional 5% independently of whether your buyer gives you your additional 5% or not.

Since the buyer doesn't have the resources for a full deposit, I would be concerned about what type of financial position they are in and taking on liabilities which depend upon them.

I am not a solicitor, so I could be talking rubbish.

G.

timmyt

arachne wrote: »

So, we're all ready to exchange on the sale of our home and have just been told that the buyer only has a 5% deposit. Apparently we could chase him through the courts for the other 5% if he pulled out between exchange and completion but surely if he has no money, we wouldn't get it back anyway would we?? Bingo, dead right I'd have thought he'd just end up bankrupt and we'd get nothing (except keeping the 5% deposit).

I don't think we have much choice about proceeding, what with buyers being the rarity they are, but would appreciate hearing any other experiences, especially if they end up happy...

Thanks

PS - This won't affect our purchase of our next home as we can find the 10% deposit without relying on getting 10% from him luckily.

5% before the current slump was the norm, because lenders gave 95% mortgages or higher. Now they don't. You don't explain why he does not have a full 10%, unless he in turn is selling and that is all he is getting. when in a chain, sellers often now accept less than 10% as most non-first time buyers are only using their depsoit they receive on their sale.

just make sure 5% is still enough money to make sure he has incentive to proceed....thoguh if he backs out, you default and so you will be sued and need to still go after your Buyer....so again make sure his 5% is enough and get to the bottomg of why he can only give you 5%

azkaban420

Arachne,.just.out.of.interest,.could.it.be.that.they.are.putting.5%.at.exchange,then.providing.the.balance.on.completion?

I.ask.because.my.brother.has.today.exchanged.and.completed.on.his.sale.and.purchase.but.all.along.the.line.it.was.just.agreed.that.he'd.take
5%.from.his.buyer.at.exchange,.then.the.balance.later?

As.it.was.only.going.to.be.a.matter.of.a.couple.of.weeks.in.between,.we.were.happy.with.this..His.buyer.did.have.more.than.enough.deposit,but.
for.exchange.purposes,.they.were.ok.with.5?

Have.re-read.that.you.put.you've.been.told.he.only.has.5%.but.did.they.make.it.clear.that.there's.no.more.to.follow?

Az

timmyt

azkaban420 wrote: »

Arachne,.just.out.of.interest,.could.it.be.that.they.are.putting.5%.at.exchange,then.providing.the.balance.on.completion? obviously, you cannot buy the house without paying for it, so you missed the point of the whole post

I.ask.because.my.brother.has.today.exchanged.and.completed.on.his.sale.and.purchase.but.all.along.the.line.it.was.just.agreed.that.he'd.take
5%.from.his.buyer.at.exchange,.then.the.balance.later?

As.it.was.only.going.to.be.a.matter.of.a.couple.of.weeks.in.between,.we.were.happy.with.this..His.buyer.did.have.more.than.enough.deposit,but.
for.exchange.purposes,.they.were.ok.with.5?

Have.re-read.that.you.put.you've.been.told.he.only.has.5%.but.did.they.make.it.clear.that.there's.no.more.to.follow?

Az

keep up.:rotfl:

azkaban420

timmyt wrote: »

keep up.:rotfl:

Sorry.lol.I.meant,.do,they.have.another,.5%.for.the.deposit.floating.
about.but.not.quite.free.yet,.that.they.will.pay.on.completion.meaning
they.don't.necessarily.have.a.95%.mortgage?!

Or.maybe.I'm.just.too.tired.and.yes.have.missed.the.point.of.the.whole.thread?

I'll.get.my.coat....



Az