First Time Buyer - A question about conveyancing and 10% deposits

ftblondon

Hi all,

I'm in the process of buying my first home and learning a lot as I go! This forum has already been really useful to me, and I hope someone here might be able to help me out with two small queries.

1. I'm currently using some pretty useless conveyancers which my estate agent recommended (I know, silly me). After I had instructed them (paying £60), my estate agents sent me the conveyancers' name. A quick Google shows they are not the most popular firm of solicitors! They are unresponsive to e-mail and today I spoke to a junior administrator on the phone who was aggressive and unwilling to put me in touch with an actual solicitor, even though she was unable to confidently answer my concerns. In short, I have a bad feeling about them, too.

I hope I can put this experience down to first time buyer's naivety and instruct a local (London-based) solicitor instead to help me through the conveyancing process. Would this slow down the process unnecessarily? I have given my mortgage provider the rubbish solicitors' names, but is it quite easy to ask them to switch to a different solicitor at this early stage in the process?

2. The second thing I'm confused about is the conveyancing deposit.

I'm arranging an offset mortgage for a property with an asking price of £200,000. I have 50% savings (£100,000) and I'm borrowing the other 50% (£100,000).

As I understand it the conveyancers will want 10% of the asking price (£20,000) to give to the seller on the exchange of contracts. The bank has told me I will not be able access my account until the contracts exchange, so I wouldn't be able to borrow that £20,000.

How does this usually work?

Should I be paying the £20,000 out of my savings before setting up the my offset mortgage, leaving me with £80,000 savings to start off with, and borrowing £100,000? If so wouldn't this affect my mortgage deal as it changes the ratio between what I have saved and what I want to borrow?

Many thanks in advance!

kingstreet

Changing solicitors is fairly common and straightforward. Give the agent and the mortgage lender the new firm's details and they can amend the paperwork.

Make sure you check for any charge the firm you're leaving might make.

The mortgage money does not come until completion day, so the deposit you are putting down comes from your savings. You pay 10% to your solicitor in advance of exchange of contracts with the remainder payable in advance of completion.

Once the mortgage is drawn down and the purchase completed, whatever savings you have left you put in the offset account and this will reduce the interest payments you make on the mortgage negative balance.

If you are buying for £200k with a £100k mortgage, your £100k savings is making up the difference and you'll have nothing in the offset account to start out. Are you sure you understand this completely?

ftblondon

kingstreet wrote: »

Once the mortgage is drawn down and the purchase completed, whatever savings you have left you put in the offset account and this will reduce the interest payments you make on the mortgage negative balance.

If you are buying for £200k with a £100k mortgage, your £100k savings is making up the difference and you'll have nothing in the offset account to start out. Are you sure you understand this completely?

Hmm I'm not sure I understand it completely - I'll only have £80k savings since I'll have already put forward £20k at exchange of contracts? or I effectively get that £20k back at completion?

G_M

You pay £20K from your savings at Exchange of Contracts.

At Completion you pay the balance of the purchase price ie £180K - £100K from the mortgage and £80K from savings.

Plus of course the other fees: solicitors, Stamp Duty etc from your savings.

kingstreet

ftblondon wrote: »

Hmm I'm not sure I understand it completely - I'll only have £80k savings since I'll have already put forward £20k at exchange of contracts? or I effectively get that £20k back at completion?

Before you buy the property you will give your solicitor £100,000 (in two slices) and he will get the £100,000 from the mortgage lender. This will give the £200,000 he needs to buy the property for you. As G_M has said, you'll also need money to pay for the fees and other costs.

As you've done things so far, you'll have nothing in the offset account if all your savings are being used to purchase the property.

ftblondon

G_M wrote: »

You pay £20K from your savings at Exchange of Contracts.

At Completion you pay the balance of the purchase price ie £180K - £100K from the mortgage and £80K from savings.

Plus of course the other fees: solicitors, Stamp Duty etc from your savings.

Gotcha! Silly question I know but I was having trouble articulating it to the solicitors! Thanks to both of you for the advice.