When to give deposit

Guru86

Good evening

We have just sold our house and seen one we want to putt an offer on.

We can afford payments etc but won't have to full deposit needed for 2-3 months. Now I know it can take this long to complete sale and exchange.

I am just wondering when the bank will need the deposit ? Will they need it straight or away or once the sale is about to complete?

Thank you

Neil

ellie27

Have you applied for your mortgage yet?

Our solicitor wants to see proof of our deposit a week or so before we complete.

It will be your solicitor who will take your deposit. Our solicitor has asked to have it a few days before our completion day.

Guru86

Thanks for quick reply.

No just mortgage in principle but I take it bank will want to see proof?

ellie27

Guru86 wrote: »

Thanks for quick reply.

No just mortgage in principle but I take it bank will want to see proof?

o

It was my husband who completed the mortgage application but I dont think he showed the bank proof of deposit (although it would make sense that they did ask!)

HouseBuyer77

The EA may want to see proof too. Not having a full deposit in place at the point of offer could ring some alarm bells...

Guru86

we have the full deposit available now but when we complete fees will come out of it so that's why I am wondering when have to give it? Hench why need a two more months for everything to be in place

HouseBuyer77

Well the major costs are stamp duty and the solicitor's fee and potentially mortgage product fee. This is all paid for with the monies you transfer to the solicitor. The solicitor will require a deposit of 10% usually to enable contract exchange and then require the rest of the money post-exchange to complete.

Of course before this you need to pay out for the mortgage valuation survey and an application fee, you might want a homebuyer's survey and you might want further reports from other experts (gas/electrical etc). The solicitor will probably require some kind of upfront payment too.

Though if your entire sum of savings just covers the deposit and you still need to save a couple of months to afford the fees be careful! Home ownership can incur many unexpected bills, you really want some savings left over as emergency cash. Have you thought about the costs of furniture/white goods/curtains etc?

kingstreet

Guru86 wrote: »

Good evening

We have just sold our house and seen one we want to putt an offer on.

We can afford payments etc but won't have to full deposit needed for 2-3 months. Now I know it can take this long to complete sale and exchange.

I am just wondering when the bank will need the deposit ? Will they need it straight or away or once the sale is about to complete?

Thank you

Neil

It's more likely your solicitor who will require evidence of deposit rather than the lender. Many lenders delegate this to solicitors who have to satisfy themselves anyway.

As far as lenders go, some do, some don't. You would need to establish your lender's policy and speak to your solicitor.

Isn't the equity in your property sufficient, with your buyer's deposit covering exchange of contracts?

Guru86

Unfortunately not we bought in peak of bubble so lost money. Thanks for all advice

lindsloo

We go and sign the contracts next week and have to take a bankers draft for deposit with us. Every mortgage lender and solicitor is different.

G_M

So is the deposit tied up in a 3 month notice account? Or are you planning on earning the deposit in 3 months? Or is it an inheritance you will receive in 3 months?

Provided you can convince the seller (his estate agent) that you will have it without delays, you should be fine.

The bank won't want it - they are providing you with money, not the other way round!

The sequence is

* satisfy the seller, (and your solicitor if he asks) that you have/will have the money required to buy
* make a small down payment (£300?) to your solicitor to cover cost of searches etc
* pay 10% (or less by negotiation) of the purchase price at Exchange of Contracts. This is a 'deposit' to the seller - a different meaning of the word to the cash you are putting up.
* bank releases the mortgage to your solicitor a day or so before Completion
* on completion, pay the outstanding 90% to the buyer (mortgage + any additional 'deposit' you are contributing)