FTB - Large Deposit Risks ?

mchu6am4

Hi,

I'm in the process of purchasing a house and have not exchanged contracts yet. I plan to put a large deposit (30%) for the purchase (+ remainder on mortgage).

Are there any risks associated with this - and at what stage do I have to pay this deposit (do I have to pay it all in one go?)

Any advice gratefully appreciated.

Thanks, Ash

helping_hubby

Hi,

Also a first time buyer here and I had similar questions to you. We've got a 20 something % deposit, and we've paid 10% of the house purchase price so far to our solicitor ready for exchange. Then I assume the rest will need to be at the solicitors for the completion date.

As for risks, I assume you mean losing it if the chain falls through? For as long as you haven't exchanged even though the solicitor may have your deposit then it's still yours. But if you've exchanged and it was you who pulled out then you would lose your 10% deposit (at least thats how I thought it worked).

mchu6am4

I'm not involved in any chain as I'm FTB and the property is vacant. If you've managed to place a 10% deposit (even though your final figure will 20%), then I guess I can do the same until completion?

Tiger_greeneyes

All deposit monies have to be with your solicitors before completion can take place. It's imperative you have the funds with them or completion will be delayed and it'll cost you dearly. I always make sure my solicitor has my deposit about a week beforehand where possible (my money is usually tied up in high interest accounts and they take a while to release the funds - so I do it in good time). The solicitor will put the money into a client deposit account so you'll still be getting interest on your deposit

If you don't exchange or the other side holds up completion then you'll always get your deposit back. If it's down to you that completion hasn't happened on time then you'll be paying the costs.

That's the only risk your money will be up against

mchu6am4

Understood, many thanks - So how do you pay the deposit to your solicitor? Will it be a direct/online bank transfer or is it a bit more manual?

And, can you pay part-deposit on exchange and the remaining on completion?

Ash

Tiger_greeneyes

mchu6am4 wrote: »

Understood, many thanks - So how do you pay the deposit to your solicitor? Will it be a direct/online bank transfer or is it a bit more manual?

And, can you pay part-deposit on exchange and the remaining on completion?

Ash

Solicitors aren't fussy how you pay them - so long as you get it there on time. Always make sure that if you're paying by cheque (as opposed to electronic transfer) that you take into account clearance times. Larger sums of money often take longer than normal.

You have to pay the full deposit on exchange. It's usually 10%. Double check with your solicitor how much they need in plenty of time. The rest of the funds (in your case 20% if you're putting 10% deposit down + mortgage funds) need to be cleared in your solicitors bank account prior to completion.

There's nothing to stop you from handing over your 30% all in one go though, your solicitor will put it in a client account and you'll get interest (I think I mentioned that before).

helping_hubby

mchu6am4 wrote: »

Understood, many thanks - So how do you pay the deposit to your solicitor? Will it be a direct/online bank transfer or is it a bit more manual?

And, can you pay part-deposit on exchange and the remaining on completion?

Ash

I believe its by same day bank transfer usually, or bankers draft. You have to go to your bank I think and instruct them to do it. I'm not 100% sure but I expect it can be instructed over the phone. Same day transfers incur a fee...I'm sure different banks might have different charges but we found out for ours that it was about £30 for a bank transfer and £12 or 18 (sorry cant remember) for a bankers draft. We paid by cheque, but the risk of paying by cheque is the cheque needs to clear, so you may p*** the other people in the chain if it didn't clear on time.

We were asked for just 10% of the deposit for the exchange date. The remainder will be paid before completion.

franklee

If you are moving large sums then it may be worth paying out the £30 for a CHAPS transfer (same day bank transfer) as opposed to doing a BACS transfer (three to four working days). It's worth working out how much interest your cash is currently earning per day, if it's more than £10 then you lose more buy having the cash going awol for the three to four working days.