Exchange of contracts - 10% deposit?

GhostDog_2

Checking the solicitor's papers which arrived today it states that on exchange of contracts we will be required to pay a deposit, usually 10% of purchase price...... :eek:

Where does this money come from if we've applied for 100% mortgage?

lynzpower

as I see it on exchange, you sol contacts your lender and gets the money. If you pull out 10% of your 100% will be given to vendors .

Dont qoute me but im fairly sure thats the way it goes

Bargain_Rzl

I thought if there was no deposit involved, this is when people have to exchange and complete on the same day

Bossyboots

Bargain_Rzl wrote:

I thought if there was no deposit involved, this is when people have to exchange and complete on the same day

I agree with this. I can't see it working any other way. The lender is not going to release funds which are at risk of not being secured should the mortgagee fail to complete the purchase.

It is quite usual these days to negotiate that only 5% is paid at exhange with the remaining 5% still being payable if the buyer fails to complete. That won't help here though so it looks like exhange and completion will have to happen on the same day.

silvercar

If you have stamp duty and solicitors fees set aside you could use that for your deposit. Most people will accept 5% these days.

Ali120604

Call your solicitor to double-check. Mine said we had to do things which did not apply to us and when I phoned she said she had copied the wrong paragraph frpm standard letters! They could have made a mistake.....

Hillfly

When we moved, because we were using a bridging loan we managed to agree a reduced fee for the exchange - after all it is a token of goodwill and we wanted to avoid drawing down onm the bridge until completion.
You could ask you solicitor to see if the vendors solicitors will accept a lesser figure. They may be willing to help as you have 100% mortgage.

missbee

When we bought our current house it was on a 100% motgage. We unfortunately still had to pay a deposit - we didn't realise and they wanted 5% - we simply didn't have it. In the end I think some negotiating happened on our behalf and we managed to only have to give £1000 - I used my overdraft!! But basically I reckon you'll have to give something. We didn't exchange on the same day though - it seems from post above this is a possibility.

GhostDog_2

Thanks everyone

I emailed my solicitor to enquire and she has informed me that exchange & completion will need to take place on the same day :eek:

I think this is good news.....we do after all want to be in for Xmas! :rotfl:

Dasnookster

This has just happened in our chain.

Basically we have FTB's buying our house who are having 100% mortgage so they have no deposit. All our equity is tied up in the sale of our property, so we have no deposit until the money comes through on completion, originally we were told that was fine as the deposit from our buyers would pass on up the chain - that's before everybody realised the FTB's didn't have a deposit.

Our solicitor wrote to us and gave us two options - either we proceed without a deposit (which is something our sellers had to agree to as well) or we would have to exchange and complete on the same day.

There were four links in our chain and everyone said they would rather proceed without a deposit than exchange and complete on the same day, so that is what has happened.

What this means is that should our buyer pull out, there will be no deposit money to claim and we would have to sue them independently.

Dasnookster

Sorry, you posted your message while I was typing.