Deposit amount within contract

Kynthia

lowfoon wrote: »

Hi McTaggus,

Thanks for the update. We have had news back from their solicitors and they said the sellers is fine with reducing the deposit from 10% to 5% on the basis that the property they are buying will accept a deposit of similar amount. Although I am going with it for the moment, I don't quite understand where we stand here, and how this is any of our concern.

The fact is our mortgage agreement is 95% LTV, so we cannot possibly pay a deposit of anymore than 5%.

The vendors have sold their property to you for an agreed price and it's not their concern how you pay for it as long as you can pay. The fact you only have 5% in cash and are borrowing the rest is between you and your mortgage lender. They can still insist on the standard 10% on exchange if they want, although most would agree to reduce that to 5% rather than potentially have the sale fall through. Some buyers have to scrape together funds from friends and family to cover the time between exchange and completion.

G_M

lowfoon wrote: »

Hi McTaggus,

.... I don't quite understand where we stand here, and how this is any of our concern.

The fact is our mortgage agreement is 95% LTV, so we cannot possibly pay a deposit of anymore than 5%.

Of course it is your concern!

Just who is buying this property? Errrrrr..... you!

Who's name is on the contract of sale? Errrrrr..... yours!

Who is contractually bound to pay the seller? Go on.... have a guess!

So who is responsible for paying the agreed price, at the agreed times? Again.... no prize for getting this right!

And who is responsible for making sure they have the finance available? Yup! You got it! You again!

lowfoon

Thanks for the sarcasm. What I was in implying was that the property they are purchasing and the deposit they are putting down is nothing to do with us. Either way they will be getting the agreed purchase price from me.

G_M

lowfoon wrote: »

... Either way they will be getting the agreed purchase price from me.

Yes.

10% of it at Exchange of contracts and 90% at Completion.

Unless the sellers are nice, and agree to help you out by accepting 5%, which they may or may not do depending on their own financial position, their attitude to risk, their willingness to compromise etc etc.

McTaggus

G_M wrote: »

10% of it at Exchange of contracts and 90% at Completion.

Unfortunately, I think perhaps this is something many FTB'ers don't realise - myself and the OP included - is a standard requirement for the point of exchange, and also don't realise that there is a difference between the deposit amount you put down as part of your mortgage LTV versus what is typically contractually required upon exchange. A lot of websites also don't reference it when you look at information about the house buying journey and just specify when you pay your deposit (which most naively assume is the deposit agreed with your mortgage provider). For me, the first I knew about the requirement was the first meeting with my solicitor, and it did come as quite a surprise!


I know the onus is on us as the buyer to ensure we are informed and responsible for fulfilling obligations associated with the house buying journey, but I can't help but think that this requirement should be more widely communicated. If it were, FTB'ers could place offers conditional on the fact that they would only have 5% deposit, rather than causing headaches and heartaches later for all involved, particularly if the seller is dependent on a 10% deposit going up the chain to supplement their next property purchase.