Extra Deposit (strange question)

uberteeb

First time buyer, saw a property a few weeks ago that was top of my list, I found out at the weekend that it is going up for auction next Tuesday so I phone the estate agent on Monday.

I am now in a position where I have offered £102k for the property, this has been accepted and I have a mortgage in principle from Halifax, I need to borrow around £87 (when you lump on all the fees). Halifax are happy to offer me up to £127k but want to see a payslip so I'm giving my last 3, bank statements, savings statements and other things to my mortgae consultant tomorrow. I work in the public sector on just over £26k so I'm in a secure job.

Despite being on the phone non stop to mortgage people, estate agents and lawyers I don't think I can have a full offer in place before the end of the week in order for him to pull it from the auction. I don't want to go to the auction as a FTB and already have a cracking deal on the flat.

The problem is, the seller (who has accepted £102k) wants some sort of guarantees that I am going to buy before he will withdraw from auction. His lawyer has told the estate agent of basically a £5 deposit to get him to take it off the auction (this would all be done officially through lawyers).

So basically no mortgage means I lose the £5k.

The thing is, the Home Report on this flat is £125k, I'm getting it for £102k, it's be far the best flat I've seen (out of about 30) in terms of striking the size/location balance.

Surely with Halifax saying they would give me £127k and with me earning £26k in the public sector there is no way I won't get a mortgage? (No debt apart from student loans, never been in trouble with credit either).

So if I need to pay this £5k should I do it? Everyone I have spoken to says this is all very strange, but I can see where the seller is coming from as he doesn't want to withdraw from the auction only for me to pull out afterwards.

I'd appreciate any advice. I'm in Scotland if this makes any difference.

hcb42

I would not pay that £5K no.

If you lose it, it isnt meant to be, meantime put some pressure on this week, in Scotland things tend to be a bit sharper.

I am surprised you could borrow £127K on your earnings tbh , although at least you are not stretching that far.

G_M

I found this surprising till you said Scotland. In Eng/Wales, no contract to buy property is binding till Exchange of Contracts. That what 'Exchange of Contracts' means!

So a (£5K) deposit (presumably in exchange for some kind of contract) either constitutes 'Exchange of Contracts', in which case both parties are bound to buy/sell, or it doesn't, in which case either party can legally withdraw without penalty.

I don't see how you can have a contract agreeing to exchange contracts later!

There again, as I say, the Scottish property-buying process is different.....