FTB question: When exactly must deposit be in hand?

DoubleOhScrimp

Good day,

I have 41.5k of my 45k target deposit in hand. I can grow the deposit at 1.2-1.5k a month ... so ~3 months away from target.

My parents have offered to cover non-deposit costs ~£4k.

Hoping for a 180k mortgage which with a 45k deposit = 225k for a purchase in the general vicinity of Cambridge.

I have only being looking at properties online to date but am now wondering at which point I should transition to viewing and making offers etc.

In order to time things properly I seem to have to take the following into account:

• Time taken to find and complete. General feedback I have received from acquaintances recently buying is that this takes a long time.
• If I assume its going to take a long time but I find the right place quickly with a willing buyer I dont want to incur costs only to discover that I wont have the deposit ready ... wasting my and the vendors time and money.
• I would like to start viewings with an AIP and proof of deposit in hand. Is the size and availability of your deposit (on the day you apply for AIP) relevant to the AIP process? i.e. If I approach a mortgage company with a 41.5k instead of 45k deposit will that change the amount offered by them?
• How do I deal with the fact of ~4k appearing "out of nowhere" in my account? Would banks view this as someone helping me with the deposit as opposed to helping with costs? (To emphasize ... the final 45k deposit will provably have come from my personal savings only). Do banks even care where your costs money comes from? If this "magic" 4k is going to cause issues should I just save for an additional 4 months (3+4 = 7 months in total) instead?

To sum up when must the 45k be in my account ready to be taken by the solicitors? i.e. when can I actually start house hunting for real? :beer:

kloana

DoubleOhScrimp wrote: »

Time taken to find and complete. General feedback I have received from acquaintances recently buying is that this takes a long time.

"How long is a piece of string?". House-hunting in itself will take as little or as long as necessary. Completion can take anything from a few weeks, to a few months.

I would like to start viewings with an AIP and proof of deposit in hand. Is the size and availability of your deposit (on the day you apply for AIP) relevant to the AIP process? i.e. If I approach a mortgage company with a 41.5k instead of 45k deposit will that change the amount offered by them?

In your case, the numbers mean that your missing £3.5k may affect the mortgage deal you're looking for (though not necessarily the actual amount you're offered). If you state that you'd like to borrow £225k, with £41.5k down, you'd be looking at mortgage deals (and associated interest rates) in the 85% or 90% LTV bracket, depending on your lender, even though your actual LTV value would only be 82%. There'll be different rates for every 5, 10, 15% you're able to knock off your LTV, but different lenders put these indicators in at different % levels.

How do I deal with the fact of ~4k appearing "out of nowhere" in my account? Would banks view this as someone helping me with the deposit as opposed to helping with costs? (To emphasize ... the final 45k deposit will provably have come from my personal savings only). Do banks even care where your costs money comes from? If this "magic" 4k is going to cause issues should I just save for an additional 4 months (3+4 = 7 months in total) instead?

If it's your money, and you can prove that you've personally saved it, you should have few worries (the fact that you need to save it over 3 months indicates it may be from your salary, or other personal income?). Your deposit is relatively large compared to many FTBs, and the sum of money, in itself, is also large. For some FTBs aiming for modest properties, the £3.5k you're "missing" constitutes their entire 5%+ deposit. In your case, it's just a small fraction of what you've already saved. I magically dumped £2k onto my own FTB deposit. This £2k comprised a larger percentage of my overall deposit than your £3.5k would, as we only put down £15k/82% LTV anyway. It was my money (an amalgamation of cash and small savings pots). No questions asked, though I could've easily explained it anyway.

kloana

kloana wrote: »

If it's your money, and you can prove that you've personally saved it, you should have few worries (the fact that you need to save it over 3 months indicates it may be from your salary, or other personal income?). Your deposit is relatively large compared to many FTBs, and the sum of money, in itself, is also large. For some FTBs aiming for modest properties, the £3.5k you're "missing" constitutes their entire 5%+ deposit. In your case, it's just a small fraction of what you've already saved. I magically dumped £2k onto my own FTB deposit. This £2k comprised a larger percentage of my overall deposit than your £3.5k would, as we only put down £15k/82% LTV anyway. It was my money (an amalgamation of cash and small savings pots). No questions asked, though I could've easily explained it anyway.

Sorry, I missed your point on this, didn't realise you were talking about the assistance from your parents. Hmm - would you still have 45k at this point, as a standalone sum, ready to deposit? Not exactly sure how lenders view assistance with purely non-mortgage/deposit costs, but again, your deposit is healthy, as is your intended LTV (even if you didn't manage to "get in" to a <80% LTV deal). Somebody else is bound to give you a more informed answer

mummyroysof3

What are the costs they are helping with? If its solicitors for example then it doesn't have to be a lump sum in your bank does it? Not sure what other costs you have though

Sally22_2

My parents are paying my solicitors costs for me, but they are just writing cheques when needed from their personal account and the solicitor is happy with that.

Bartosz

Hello
From my experience with the recent purchase:
1. I strongly advise to have the deposit ready before you start looking for a house, because it is possible you will find it after few days like me and there will be no time to save the missing few K£.
2.Your lender can request the proof of the deposit ( statements from accounts showing you already have the 45K). My lender requested the above on the very start of the application ( 40% deposit).
The good thing is that you dont have to show the funds needed for all the cost like land tax stamp duty and fees (~4k)
3. The property you buying can be undervalued by the lenders surveyor ( mine was, all the houses in the area sold over 20K more and I got such valuation outcome, house is in perfect condition and only 16 years old, everything ok and lots of potential for extension etc.) EA showed me house they sold without staircase and ripped floor in bathroom for 3K more than my house. Im just saying you never know what valution result you will get. I had to put 4K more towards the deposit to keep the low interest offer. Emergency funds saved my purchase.

Never use EAs broker
Never take their insurances etc.
Not only expensive but very often you cannot cancel it, only broker can haha.

Hope this helps:)

It is my first post but long time lurker, sorry for my english it is not my native .

DoubleOhScrimp

Bartosz wrote: »

2.Your lender can request the proof of the deposit ( statements from accounts showing you already have the 45K). My lender requested the above on the very start of the application ( 40% deposit).

So they wanted proof when applying for an AIP or only when your offer was accepted and you applied for the mortgage?

DoubleOhScrimp

Sally22 wrote: »

My parents are paying my solicitors costs for me, but they are just writing cheques when needed from their personal account and the solicitor is happy with that.

My parents live overseas so that isnt really practical. They would pay the contribution to me directly.

mummyroysof3

If they transfer it as needed rather than a large lump sum would that be better? Do solicitors get paid as you go along or after purchase is complete? I can't remember

Bartosz

After your offer has been accepted by vendors and after AIP but before receiving official mortgage offer. Proof of deposit is not needed for AIP.
To save time you can provide account statements, p60, employer references and landlord references stright away to the lender - some of those they will request later anyway.

Small fee is paid upfront but Solicitors are paid on the day of completion, you have to transfer your deposit and solicitor fees+tax into solicitor account few days before , My solicitor has 1 day deadline for cleared funds before completion, you have to make sure what is the deadline for your lawyers.

I will transfered it using online banking in 10K chunks to take advantage of Faster payment, i will save 7 pounds ( 2 days of interests hahah)

Yorkie1

The solicitor will want a few hundred pounds up front when you instruct them (i.e. after you've had your offer on a property accepted by the seller). This money is for searches and such like that the solicitor has to pay for up front.

Upon exchange, you pay 10% of the purchase price to the solicitor. This is called the deposit.

On completion, you pay the solicitor the balance of the purchase price (i.e. the difference between the 10% figure and the amount the lender is providing), the stamp duty, the rest of their fees and anything else listed on the accounts document sent to you by the solicitor, called the completion statement.