10% deposit at exchange of contracts Q

puregeordie

Think I've either cocked up or I'm just confusing myself and stressing out here!

I've accepted an offer on my house and these are first time buyers and all seems good, I've found a house (New Build) I like and reserved a plot this weekend for £500, Looks at the form I have signed it says builders 10% deposit required at exchange of contracts for the purchase of the property.

The property isn't ready until October and they require £19,500 at exchange of contracts which, Erm I don't have however I'll have more than enough equity of the sale of my property.

My question is does the deposit come from the equity released from the sale of my property? Will I have to exchange and complete on the same day? christ I better get a move on if that's the case and look for rental!

I'm going to speak to a solicitor first thing on Tuesday to find out what happens, cos I'm starting to think I've done a bobo!

Anybody have any ideas anywways, Thanks,

Sycorax

Having just been through a purchase (not a new build) this was exactly how it works. 10% payable on exchange (as a retainer for the property, which is forfeit if you don't complete) and the other funds (deposit on the mortgage and release of the mortgage) happens on completion.

retepetsir

I've had to read into this too as I've also been panicking! We're in the process of moving and also don't have our deposit in cash to transfer.

From what I've read, it's common for the money to move 'up the chain', so they'll effectively use the money from the FTB of your place to then secure the exchange of contracts for your next property.

I don't think you'd exchange and complete on the same day but the solicitor would make sure its noted down that total funds will come from the sale of your house.

kingstreet

Your buyer's deposit effectively becomes your deposit, with solicitors making an allowance for any difference if you have equity backing any remainder.

puregeordie

Hi, So I don't have to panic and somehow find 20k for the builder, as long as everything goes through as planned.

Thank you.

kingstreet

puregeordie wrote: »

Hi, So I don't have to panic and somehow find 20k for the builder, as long as everything goes through as planned.

Thank you.

That's right. Ask your solicitor if you want complete peace of mind.

retepetsir

puregeordie wrote: »

Hi, So I don't have to panic and somehow find 20k for the builder, as long as everything goes through as planned.

Thank you.

Correct, as I had the same worries!

puregeordie

Will Do:) and thank you.

I know I'm ringing the solicitors but just thought I'd run this by you as well,

Another thing at exchange of contracts is that when I get kicked out, or will the completion date for me to leave be a little after this? maybe a few weeks or something, just wondered what the general rule would be for me to stay in the property for as long as possible without renting!!

Thanks again

Sycorax

You get kicked out at completion which is normally 28 days after exchange.....unless you negotiate to complete earlier.

Give your solicitor a call he/she will talk you through the process

puregeordie

okie dokey, thanks

Lavendyr

Sycorax wrote: »

You get kicked out at completion which is normally 28 days after exchange.....unless you negotiate to complete earlier.

Um, not normally 28 days! That sounds incredibly long to me (though maybe you mean it's normal for a new build?). We completed a week after exchange.