Do we need 10% dep?

dattasatta

Hello,

I have had a letter from SOL saying that it is usual to but down a 10% deposit on exchange of contracts. We are re-mortgaging to a new property and the deposit would be £12,400.

We are already putting a £31,000 deposit on the house (through equity in our property) but having got the spare cash to hand to put down on exchange iyswim.

Am I going to lose the house?

freebo_2

I seem to remember you can agree a lower deposit through your sols, most people don't have 10% in cash available, even when moving up with equity.

brock-cruse

Hi
Dont get me started on this subject of remortgage to pay for house!
We have been waiting to exchange for 3 weeks as my buyer is remortg her house to pay for mine and although she has 10k in cash for deposit her sol refuses to exchange with this. Her sol will only exchange once the funds have been paid by the remortgage company which are taking forever to pay out!
Is the solicitor you are using the one that is also doing your remortgage? It maybe thatif your sol is like-minded to my buyers then you will use the money from your remortg to pay the deposit.

dattasatta

Hi Brock,
Good Lord you are having a nightmare:eek:

Can't you just bang there heads together:rolleyes:

Anyway, yes my soliciters and mortgage company are tied to the same company so maybe that would be a help.

I haven't got the spare cash to put down! I am a bit cross with FA as she did not warn me about this, she gave me a breakdown of cost's that would be paid as we go along and a breakdown of what would be payable on completion. No mention of this though!!!

Frostygills

Our Sol told us about 2 weeks ago, that the 10% deposit is an historic thing, as the house prices have sky rocketed it's just not reasonable to expect that kind of money now, so they say a nominal amount would be required. eg our house we are buying it would of cost us 30k in deposit and they said about 10k max would be more than enough.

dattasatta

Thanks Freebo,

The thing is that I haven't got any spare cash at the moment. It has all been spent getting my place up to date.

Will they take the deposit that our buyer is giving as something to put down on new house??

freebo_2

dattasatta wrote: »

Will they take the deposit that our buyer is giving as something to put down on new house??

I don't think there's any hard & fast rules, but yes I think that can be arranged if all parties agree. Have a chat with your sols, this is the kind of thing you're paying them for.

silvercar

It is normal for the deposits to be passed up the chain ie the FTB pays 10% of the value of the first house, the next person in the chain passes along the deposit they have received and adds to it whatever money is required to make upto 10% of the house they are purchasing.

SO if the prices were 100k, 250k and 400k.

The buyer of the 250k property would take the 10k deposit received from his buyer, add 15k of his own money to make the 25k required. The buyer of the 400k property adds to this 15k to make 40k etc.

Obviously not all chains work so smoothly but the basic principal holds.

Normally, you wait for mortgage offers before exchanging with deposits, not for receipt of the mortgage money.

The time it all falls apart is when someone is getting a 100% mortgage so has no deposit.

It is quite common to agree 5% rather than 10%.

brock-cruse

Hi
Sorry i was getting confused with your situation! If you have a buyer for your house then their deposit is generally just passed up the chain. We have no deposit to put down either and will just use what our buyer gives us..if they ever pull their finger out!

Jonbvn

I remember just before we completed on our house, our solicitor sent me a statement of account, and he conveniently forgot that we had paid a 10% deposit!

This leads me to think that in some cases, the requirements for such a reasonably large deposit are not alway adopted.

dattasatta

Hi all,

Well I spoke to FA and she said it is nothing to worry about, our vendor will just proceed with no deposit. She has re-assured me that this is true of a lot of cases, and that asking for a 10% deposit at exchange is outdated, particularly now when prices are so high.

Phewww!!