questions about exchange, completion and deposit with chains

sddxac

I am selling my flat and buying a house now. The house costs about twice of the flat price and I need the money from the selling to pay for deposit of my house mortgage.

Now the selling has exchanged contract and completion date is set to 3 weeks later. My solicitor has got 10% deposit from the buyer.

Can I exchange contract for my house buying with lower deposit now and set completion date to be the same as my flat selling? The reason is that I want to secure the house offer but I can not pay 10% deposit to exchange. I am just worried about failing of completion on time of my flat selling for any reason,e.g. buyer can not complete or mortgage bank transfer fund delayed.

Hoploz

Are you saying you have absolutely no cash to put in at all?

Normally people use the deposit paid from their sale to pass up the chain to the purchase, along with any additional money required to make up the 10% of the purchase price in cash, paid to your solicitor before exchange.

Do you mean you need the sale to complete before you will have enough for the deposit you need to buy?

If so, perhaps it may work if you can arrange to exchange and complete on your purchase all on the same day as your sale completes?

Hoploz

Alternatively, if you have SOME cash available perhaps you could ask your seller whether they would accept a lower % deposit payment. They might be annoyed about that, as you really should have had this sorted out before now, but it might be better for them than waiting to exchange and complete on the same day, as suggested above.

sddxac

Thanks for your reply Hoploz.

I firstly planned to exchange and complete for my house buying on the day when my flat selling completes. Then the agency for my buying told me that the seller can accept lower deposit but want to exchange contract early. I can not use the deposit from my flat selling because it is tired up with it until completion. I could pay the lower deposit with my own money but worried if my flat selling failed for any reason and I will be liable to pay 10% of the house price, which is huge to me!

I am also worried that the seller pulls out as the house price looks increasing recently in the area. So I am ok to pay deposit with my own money, just worry about fail completion for whatever reason.

eddddy

sddxac wrote: »

Thanks for your reply Hoploz.

I firstly planned to exchange and complete for my house buying on the day when my flat selling completes. Then the agency for my buying told me that the seller can accept lower deposit but want to exchange contract early.

<snip>

It sounds like the agent may have been giving bad advice.

(In general, you should not take advice on this type of thing from an estate agent - only from your solicitor. The agent just wants his/her commission.)

If I understand correctly:

1) You have exchanged contracts on the sale of your flat (but not completed).
2) You are ready to exchange contracts on the purchase of your house.
3) You would like both completions to happen simultaneously (i.e. the same date and time)

If that's correct, just explain the 3 points above above to your solicitor, and he/she will tell you what needs doing.

(Obviously, the person selling the house to you will have to agree to this.)

sddxac

eddddy wrote: »

It sounds like the agent may have been giving bad advice.

(In general, you should not take advice on this type of thing from an estate agent - only from your solicitor. The agent just wants his/her commission.)

If I understand correctly:

1) You have exchanged contracts on the sale of your flat (but not completed).
2) You are ready to exchange contracts on the purchase of your house.
3) You would like both completions to happen simultaneously (i.e. the same date and time)

If that's correct, just explain the 3 points above above to your solicitor, and he/she will tell you what needs doing.

(Obviously, the person selling the house to you will have to agree to this.)

yes I will talk to my solicitor tomorrow with details. I just want to know if it is too risky that I exchange for the house early. I want to secure the house too, not just because the estate agent advised this.

eddddy

sddxac wrote: »

yes I will talk to my solicitor tomorrow with details. I just want to know if it is too risky that I exchange for the house early. I want to secure the house too, not just because the estate agent advised this.

No - if my description is correct, it is not risky. Completing a sale and purchase simultaneously is usual.

But you normally exchange contracts on sale and purchase simultaneously as well - so you are guaranteed to have somewhere to live!

In your situation, the big risk is that the person selling the house cannot (or will not) complete that quickly. Then you will be homeless.

silvercar

Unless you have access to loads of spare cash, you need to complete on both on the same day. In order to ensure you have the funds to do this, you need to exchange on both on the same day. This is what people normally do. If you have already exchanged on one without the other, you just need to exchange on the other and make the completion date the same as the one you have already agreed.

ethank

I exchanged contracts on the sale of my flat, and then exchanged contracts on my purchase within minutes of each other.

I completed on the same day. It is very usual for transactions to be completed in this way.

kingstreet

sddxac wrote: »

The reason is that I want to secure the house offer but I can not pay 10% deposit to exchange

The cash deposit of the first buyer in the chain passes up the chain becoming a smaller percentage of the higher purchase prices as it goes.

Homeowners don't have to come up with cash if their home contains the equity which will become their "deposit."

Your solicitor will negotiate this with the other chain member solicitors.

sddxac

ethank wrote: »

I exchanged contracts on the sale of my flat, and then exchanged contracts on my purchase within minutes of each other.

I completed on the same day. It is very usual for transactions to be completed in this way.

I hope it will be like this. I am more worried about the worse case: any unlikely happened reason like bank transfer failure or buyer failure which caused the completion delay or failure. What is the max lose I can suffer?