5% deposit on exchange

Richard_Webster

If you take less than 10% and for some reason the buyer or someone below doesn't complete you have major problems and the more of the buyer's money you have the better.

However this rarely happens.

For most people the issue is that trying to get more money is going to delay things and the chances of someone else in the chain changing their minds about going ahead during the delay period for some extraneous reason, e.g. granny died, are higher than the chances of completion not taking place at all.

So generally, the thought is that provided the deposit is big enough to discourage the person giving it from throwing it away and disappearing, it is not worth the argument about the precise amount.

A local solicitor routinely asks me if I will accept a 5% deposit. Here is my standard reply:

The sellers will be advised to accept the maximum deposit reasonably available given the usual constraints related to the size of mortgages and any deposit being provided from lower down in any chain. Please inform us if the deposit is expected to be unreasonably small.

silvercar

A 5% deposit doesn't mean that anyone is seeking a 95% mortgage. It could be that the remaining equity is tied up in the house being sold. So 5% from savings 45% from mortgage and 50% from equity in existing home. The equity in existing home isn't available money until completion.

arachne

Thanks for all the comments. His mortgage agreement is in place so I wasn't worrying whether he had enough money to complete (although I am now!!!) just whether, in the very unlikely event he pulled out between exchange and completion, we'd lose out more than usual. We are planning a few weeks gap living with parents between our sale and purchase and I doubt we'll even have exchanged on our purchase before completion on our sale so the only costs we'd lose on our purchase are things like survey/solicitor fees etc. I guess I'm just nervous because it took so long to find a buyer at all and am completely paranoid it will all fall through and this has just given me a new extra worry. I don't know his financial situation, although I'm led to believe he is really stretching himself for this purchase and 5% is all he has available so hopefully the 5% is a big enough deposit to him to discourage him from any shenanigans.

Have spent too much time reading all the problems on moneysavingexpert and am just looking for things to go wrong I think!!!!

azkaban420

silvercar wrote: »

A 5% deposit doesn't mean that anyone is seeking a 95% mortgage. It could be that the remaining equity is tied up in the house being sold. So 5% from savings 45% from mortgage and 50% from equity in existing home. The equity in existing home isn't available money until completion.

Thanks!.That's.what.I.meant.to.say,.but.you.explained.it.much.better.lol!

Az

nancyo

azkaban420 wrote: »

Thanks!.That's.what.I.meant.to.say,.but.you.explained.it.much.better.lol!

Az

Whats with all the full stops after every word?