Deposit at exchange of contracts

Senior_Paper_Monitor

Yes Mr garrunt, if you are in 'a chain', as is very often the situation, the risk is minimalised by the various deposits - and everyone 'boondiggles' around the exhange date which is then normally set the same for all parties and similarly for completion.

BUT your case, as it appears clearly defined in the original post, is that you will borrow money (one way or another) and commit yourself by way of exchange (presumably because you want to grab this particular house) when you are not 'off first base' with the sale of either flat.

There is absolutely no guarantee (indeed in might even be better described as unlikely) that you will recieve the funds for the flat - and therefore a mortgage - available to complete on the new property by the date you set at exchange for completion, in which case the desposit )and will be forfeit.

Only if you are able to obtain a 90% mortgage (virtually impossible on a 'second home' which is what it would be) then well and good - and/or if there is sufficient equity to use the balances on both flats by bridging loan (or similar) to you to fund the exhange exchange then again well and good. Both these options are uncertain in being available and increasing costs considerably.

I maintain this is a 'high risk' plan - no problem with that necessarily provided you are aware of it and can accept it.

garrunt

Senior_Paper_Monitor wrote: »

Yes Mr garrunt, if you are in 'a chain', as is very often the situation, the risk is minimalised by the various deposits - and everyone 'boondiggles' around the exhange date which is then normally set the same for all parties and similarly for completion.

BUT your case, as it appears clearly defined in the original post, is that you will borrow money (one way or another) and commit yourself by way of exchange (presumably because you want to grab this particular house) when you are not 'off first base' with the sale of either flat.

There is absolutely no guarantee (indeed in might even be better described as unlikely) that you will recieve the funds for the flat - and therefore a mortgage - available to complete on the new property by the date you set at exchange for completion, in which case the desposit )and will be forfeit.

Only if you are able to obtain a 90% mortgage (virtually impossible on a 'second home' which is what it would be) then well and good - and/or if there is sufficient equity to use the balances on both flats by bridging loan (or similar) to you to fund the exhange exchange then again well and good. Both these options are uncertain in being available and increasing costs considerably.

I maintain this is a 'high risk' plan - no problem with that necessarily provided you are aware of it and can accept it.

Thanks again.

But I think I have somehow confused you. In my first post I explain (clearly) that we will sell one flat at the point of the new purchase (i.e. in a chain) and the second will sell either before or after that point. So to me our deposit is at no more or less risk than anybody else in a regular chain.

"The plan is to sell at least one flat to fund this new purchase. We want to sell both rather than get involved in buy to let. So the second one might sit there waiting to sell after completion on the house".

Or am I missing something ? .

Thanks for your various helpfull comments. :beer:

garrunt

SPM - I think my wording has led you to believe that we will try to purchase the house before e have sold either of our flats. That's not the case. The first flat sells at the same time as we buy...if not we simply cancel everything.

Thanks.

Senior_Paper_Monitor

OK - a misunderstanding apparently.

It was the "We want to buy a house now" that confused me - I should now better (as a tad of a contracts specialist) to read the whole thing !

garrunt

Senior_Paper_Monitor wrote: »

OK - a misunderstanding apparently.

It was the "We want to buy a house now" that confused me - I should now better (as a tad of a contracts specialist) to read the whole thing !

OK. For a moment there I thought maybe we were doing something that was extra high risk and that we might end up on the streets.

Thanks ! :T