Deposit situation

Shauna4991

Hi all,

I am just writing for some advice. Basically we are FTB's and didn't know about the whole process of buying further than the steps the guide on here, our family and friends and finally our advisor at the bank told us to take.

Right now we have a Decision in Principle and a house that we like. We have been told by the people we want to buy from haven't found a house and will need time to find it before they want to start with anything else - surveys etc. They're barely looking and don't really want to complete prior to April/May earliest.

Anyway, we are confident with the house after seeing about 10 others, and want to go and put out offer in but we now know we'll need proof of deposit and we don't yet have it all. We did not expect to find one we liked this quickly.

We are short by about £2000, which we feel we will definitely be able to have by the time the mortgage goes through because between us we are both saving a grand a month, we have recently sold a car for £800 and are awaiting the money from a friend and we have also got a bike valued at £1600 to sell.

We have been told it takes about 6-8 weeks with conveyancing etc, before the deposit needs to be paid, and that's after the vendors start looking for, find and place an offer on their own house. Are we wrong in that?

The estate agents are pushing us to put in an offer and to start looking for a surveyor and get our solicitors in place, but won't accept anything less than a bank statement showing full amount as proof... (Fair enough, acting responsibly I suppose). We are feeling a lot of pressure and going in circles with it.

Basically, we are torn and need some sensible advice.

1. do you think we are unreasonable in our thinking that we will have months to recuperate the deposit before we need it?

2. and do you think we should just step back from the process for a few months and start again when we have it all? Despite probably losing the house and definitely having to end up rolling another probable 6mnth contract in our rented place?

3. Any advice on the deposit proof when there is not full amount? I am aware it sounds very bad!

Any advice would be helpful!

Thanks

melstar11

What about stamp duty? If that is payable on your purchase, you will need that up front too.

marksoton

Solicitors fees etc?

If you're 2K short on the deposit that means you presumably have no contingency fund either?

Shauna4991

There is none - it's under the amount.

Shauna4991

Our solicitors fees are being paid through the bank with our mortgage deal, and we have money set aside outside of the mortgage deposit for surveys etc.

always_sunny

What's the good ole say? "Don't count your chickens before they're hatched"

I thought you need to show proof with the solicitor, though the lender may also ask you (so I read).
The EA may ask you to show them and the seller you actually can bid given that in England anyone can make an offer and then change their mind.

What if the bike doesn't sell? or your friend doesn't give you the money?
What about the cost for the survey? What about lender costs? Valuation?

The lender will ask you for bank statements (last 3 months) and they will see if you have a cash-flow problem...

AnotherJoe

Shauna, to answer your question upfront, I would say you are being premature about making an offer.

You don't have the money, seem to be buying at the absolute limits of your finances anyway, and the vendors seem to be a long way from being ready.

This is the only point in your favour your vendors are in no rush, indeed you don't even know they will eventually sell since they apparently aren't even looking in earnest yet so their comments about not until April is ludicrous optimistic.

i think in your position I'd tell the vendors you are making an offer now but don't wish to start formal proceedings until the vendors have found somewhere to buy, because otherwise you could be spending a lot of money. Your vendors may not find anywhere, or they may decide not to move, or their end of the chain may be equally problematic. So you've got no reason to be rushing in now anyway.

If the EA asks for proof of deposit, could you borrow a couple of £k for a week, show him a bank statement or similar with most things blanked out except the number he wants to see ?i presume you can show him an agreement in principle from mortgage co or broker?

Or you could just say you'll show that when you've seen firm evidence that the vendor is serious about moving, such as having put an offer in themselves, and in the meantime this is your offer but you are still looking? Because, you should be anyway.

End of this ramble, I wouldn't actually start anything serious even if I had the money, I'd make an offer but be clear nothing happens until vendors are ready to start, and I'd carry on looking. In the meantime you might find something much better, and if this delay means you need to sign another 6 month contract so be it at least you can then get yourself in a less precarious financial position than needing to sell a bike and being owed money by a friend.

P.s. you could actually offer what you can afford, so your deposit is enough, and carry on looking. It doesn't seem to me from what you've written ..needing to sell bike, owed money by friend etc, that realistically you can afford to buy this house yet anyway?

ThePants999

Shauna4991 wrote: »

Our solicitors fees are being paid through the bank with our mortgage deal

Are you SURE? When buying a house with a mortgage, there are TWO sets of legal fees to pay - the solicitor acting on behalf of your mortgage lender, and the solicitor acting on your behalf. Usually, when a mortgage deal includes free legals, it means just the former, not both.

MrJB

As others have said - from personal (recent) experience you will need to find circa £400 for searches etc upfront when instructing solicitors.

Filo25

We find ourselves in a similar but thankfully slightly different situation as well.

We have the money for the deposit but don't for all of the other fees and Stamp Duty, we will have though by the time we complete, when we put our offer in we stipulated that based on the amount we agreed we would only be able to complete from the end of March onwards.

Not a huge issue on that one mercifully as we had proof of deposit when it was asked for but I would imagine its a lot more difficult if its the deposit you are short of.

You need to have a look at the whole process and put together a realistic budget for the expense you will incur and when you will incur it (and the funds you need to have evidence of at various times), and just do a cashflow so you can see what the peak amount you are short at any time is, and then see if there is anyway you can fill that gap, whether its by gifting from family members or any other means.

I would be tempted to say leave it for a while but I suppose if you are in an area where prices are increasing rapidly that can be an expensive option as well.

If you are going to be tight on cash you need to be really good at your budgeting and identifying all the cash you would be spending, so at least you can have confidence in the amount you need to find.

Good luck!

HumptyDumpty

Hi,

Hope I'm posting in correct thread. I've a different situation to the OP in respect of a deposit.

I've a mortgaged maisonette which I'm putting on the market soon and I'll be using the funds from the sale as a deposit. However, should the property NOT sell, can I still obtain a mortgage using the equity in the maisonette as a deposit?

I don't reside in the maisonette (my son does) but he is moving on. I currently live in married quarters and wish to move into my own house.

Is it worth applying for a mortgage in these circumstances?

Any advice from those in the know would be much appreciated.