Exchange Deposit

jetsetwilly_2

Hi,

Just doing a bit of reading...

When you exchange, you have to pay 10%-20% of the purchase amount?

How does this work if you are selling to buy a more expensive place?

E.g

We sell our place for £155k, we are buying for £230k. so need to remortgage in order to afford.

Am I missing something or worry about nothing

Richard_Watters

Typically the amount paid on exchange is 10% of the purchase price. However it can be any amount as long as both parties agree.

If you don't have the funds for a 10% deposit then offer a lower amount - although this is better done at the offer stage as otherwise it can cause concern for the vendor. However just ask your solicitor to request this via the vendor's solicitor asap.

People often think it's the amount paid as a deposit that is forfeited if they don't complete after exchanging contracts. This isn't the case, as the vendor can sue for breach of contract for the amount of their loss which will be whatever it is. Traditionally 10% will cover this hence why 10% is the amount usually paid.

jetsetwilly_2

So without any savings I can't buy anywhere? Or do I need to ensure that the exchange and completion on my home is done first thus giving me the funds to pay the deposit for the new place?

I didn't do this last time I moved (exchanged both at the same time) so not sure where I got this deposit from.

Flat_Eric

I think (other posters correct me if I'm wrong) but if you are selling then you can use the ten percent deposit your buyers will be giving you towards the deposit for your purchase. The deposit paid on exchange is usually 10% of the purchase price. Either you would make up the difference or you can ask your sellers if they will accept the sum you have available (i.e. the deposit being paid by your buyers)

kingstreet

Yep.

The buyer's cash at the bottom of the chain is normally passed up, so none of the "equity" buyers in the chain have to find any cash.

Discuss with solicitor for verification.

jetsetwilly_2

Thanks.

Will see what the solicitors say.

Would need a fair chunk of savings so will most likely need to sell this first then buy afterwards. Annoying. Hadn't even thought of that

gazter

I get the impression on here that property sales very rarely fall through from exchange to completion though, so with an agreed mortgage offer in place, a vendor is unlikely to want to pull out, because you are short of the ten percent.