Probably a silly question on Deposit and Moving House!

thesimian

Hi!
Ok this is most likely a stupid question but Ihave exhausted looking on the web as I cant seem to find what I am after - though I am useless at searching with Google I do admit!

I have a house at the moment (was a first time buyer) and am now looking to move, I have had 1 valuation done and another booked in for today. My question though relates to the deposit that is paid on exchange of contracts for the house we are moving to. I recall from my first purchase that they needed 10% of the purchase price on exchange; how does this work when you move house?

Do you still need to pay the 10% upfront or is it taken out of the price that you sell the house for which is not fully paid until completion? My current house is being valued in the region of £240 - 250K and we are looking at buying the next one at a maximum of £290-300k. After the mortgage is settled we should have about £60-70k equity.

On completion do we need to pay the 10% immediately (basically about £29 - 30k)? We only have about £5k saved at the moment, this hadnt really occurred to me before - probably being naive. How do other people manage to move house, its all so confusing!!
Many thanks - its appreciated!

kingstreet

The equity in your current home is your deposit, so no cash is needed for exchange. The solicitors normally send the cash from the bottom of the chain, up the chain, to cover each purchase.

thesimian

Thanks for the reply, so basically we wouldnt need to pay anything on exchange?
Have I read that right?
Many thanks again, I know its a silly question but the whole house buying/selling thing always has and still does scare me! lol

kingstreet

Yep.

Nothing needed at exchange.

Richard_Webster

Simply put, Kingstreet is right.

In practice it depends a bit on the amounts involved. If the buyers offered £25K as 10% of £250K then a seller's solicitor for a seller selling at £300K would be daft not to accept £25K.

However if the buyer at the bottom of the chain was buying a flat worth £80K and had £8K deposit and OP was buying for £750K then the seller's solicitors would probably not be happy with £8K as they would be expecting £75K and might settle for £37.5K! In that kind of case the people in the middle of the chain would be expected to add to the deposit paid on exchange to make it a more reasonable figure.

Starjust

I know it's not my thread but I'm still a bit unclear as to the process.
I'm buying a house for £183k using a 10% deposit from equity in my existing property which is selling for £156k. So my buyers are going to give my solicitor £15.6k on exchange and I'll need to give £18.3k to my sellers.
There's a shortfall here though, where does the £2.7k difference come from? Should I have budgeted for this?

Thanks for any help, I feel I should know this by now...