Help! Could we lose £27,000?

nifferwilko

prudryden wrote: »

Don't believe them. They probably have the money somewhere.

That's a bit harsh! I'm in a similar situation as the OP's buyers (100% mortgage) and I have nothing that I could put down as deposit. All my potential furniture is donated and I'm having to live with the horrid decor until I've saved something. I could put down a token deposit (£500 or something) but that would be it.

Not too sure what the OP should do though, though I did think the sale was legally binding if contracts were exchanged??!!

xela_17

When we first moved and had a 100% mortgage the bank guaranteed the deposit (as part of our mortgage), so if we did pull out after exchange and the bank had to pay up we would then owe the bank the 10%. We had to pay a fee for them doing this but was only a token amount. Maybe your buyers could get their bank to do similar? Our bank was HSBC if that helps.

Tiger_greeneyes

I may well have missed something here but why is your solicitor urging you to exchange and complete simultaneously?

sarah_elton

nifferwilko wrote: »

That's a bit harsh! I'm in a similar situation as the OP's buyers (100% mortgage) and I have nothing that I could put down as deposit. All my potential furniture is donated and I'm having to live with the horrid decor until I've saved something. I could put down a token deposit (£500 or something) but that would be it.

Not too sure what the OP should do though, though I did think the sale was legally binding if contracts were exchanged??!!

I was the same - 100% mortgage because I had no deposit, not out of choice. That's the point of them.

As an earlier poster said, your buyers have paid for survey, solicitor and mortgage application. And since money is clearly tight for them they're still serious. Usually with a 100% mortgage situation, E&C is simultaneous and I did this when buying with no problem at all.

Ask your solicitor how it works if you do insist on an earlier exchange. Without their deposit, what are your rights against them if they pull out. They're the best person to advise as they'll have plenty of experience with 100% mortgages these days.

sarah_elton

silvercar wrote: »

It is annoying, as we all assume that they should be able to get a small deposit from somewhere (what are they going to buy furniture with?), but if they say they have no money there is little you can do.

I think this misses the point. Say they have £5k saved for costs, furniture, whatever. They use this for a deposit and take a £95k mortgage instead of £100k.

Then what? They'd have to use credit cards or a loan to buy stuff, instead of their savings, and pay interest at a higher rate than on their mortgage. How is it in their interest to do this?

danlightbulb

We don't have any deposit either.

We are selling our house and moving up the ladder. But all the equity we make from selling will be ploughed straight into the new house. Fees and stamp duty will be paid out of the equity from our sale. There is no free cash anywhere amongst this.

If our buyers don't have a deposit then we don't pay a deposit further up the chain. If I had to find a deposit I would not be able to move simple as that.

kissingthepink

Tiger_greeneyes wrote: »

I may well have missed something here but why is your solicitor urging you to exchange and complete simultaneously?

Their buyer does not have a deposit. Deposits are lodged at the time of exchange.

SpanglyBex

Thanks for all the advice & views above. Our buyers (even though I have only met them twice) seem to be a really lovely couple & they're young teachers, so I don't want do them over financially in any way, but am just really anxious that if they drop out for any reason after exchange we could lose a lot of money with no real hope of any compensation from them! I have asked if they could put down a token amount as suggested e.g. from their stamp duty money, just a grand or so.

From what I'm reading though it appears that them pulling out post-exchange is a comparatively small risk? - they're still legally bound to us through the contract, right?

Tiger, in answer to your (I think?) question I understand that our solicitor is advising us to exchange & complete simultaneously before we exchange on our purchase, so we don't run the risk (however small) of potentially losing all our purchase deposit. I can respect that she's doing her job in this regard. But I know our buyers won't be able to complete for at least 3 weeks as they have to give notice on their rented flat, & if the contract affords me at least some protection by law I'd rather have that for the next 3 weeks than be in the position where they could still drop out anyway i.e. if we haven't exchanged... Plus it will cost us an extra £200 in legal fees to do the transaction simultaneously (hmmm...maybe that's why our sol is so keen on the idea!?!).

I'll definitely try the good suggestion of passing the buck up the chain but probably should have explained earlier that we are buying a repo & therefore it's likely that the (heartless, souless!) vendors will want their pound of flesh!

What would you do if you were me - wait 3 weeks to exchange & complete, bearing in mind it's £200 more, or exchange now & take the risk?

Thanks so much to everyone again - think I would have gone loopy a long time ago if it wasn't for this forum!:beer:

xela_17

I'd exchange now and complete in 3 weeks. As you have said that your buyers are lovely and (I assume) have given you no problems up till now I would be happy to trust them to complete.

Tiger_greeneyes

The reason I asked is because I've known 100% (& above) mortgages exchange and complete as per usual - it doesn't have to be done on the same day, although I understand your solicitor's take in this.

As your purchasers are in rented accommodation, could they not use their deposit money for their last month's rent, and offer their last month's rent as exchange monies, along with SDLT? That should amount to a decent sum, and at least you could exchange sooner rather than later.