Deposits - exchange and completion

.sparrow

Hi
I'm learning so much from these forums - we are complete first time buyers and knew next to nothing about house purchases - even what we thought we knew was wrong!

One area is that of the exchange deposit and mortgage deposit. Prior to my last question, I didn't know we were required to pay money on exchange.

Can I just consolidate my thoughts on this area? I know there are loads of posts on this:

So, the house we are buying is £200,000 new build
We have agreed to pay 5% on exchange - £10,000 minus the reservation fee £500 =£9500
The HTB equity loan is £40000
The mortgage is £150000

At completion, there is nothing left for me to pay bar legal fees as all of the remaining funding is in place so; what is the distinction in this case between exchange and mortgage deposits? I won't have anything to pay to the lender will I?

In my case I would need to prove the source of the deposit I will use at exchange then?

I just need to clear my head of the notion that I needed to save two sets of 5% deposits, one for exchange and one for completion.

Thanks in advance

elverson

You or your solicitor pays the seller (the builder) the other 5% on the day of exchange and if you need to prove the source of the deposit this will need to be sorted before exchange. Is it a gift from family?

Your solicitor will transfer the mortgage amount and the HTB amount to the builder on the day of completion.

Thrugelmir

At exchange your solicitor will ensure that the funds are in place to effect completion.

.sparrow

Thanks so the 5% on exchange is the only deposit I need to worry about then? The deposit source is cash savings and a help to buy ISA, but I realise now that this can't be used for the exchange deposit - I'm having to withdraw the money from the ISA and fund the shortfall from our salaries A shame the bonus is going to waste. Else I will have to get a gift from my parents - not good when we wanted to do this ourselves!

On the otherhand, what are the chances of the builder accepting less than a 5% deposit on exchange, so I can make use of the HTB ISA bonus? Any thoughts?

Thrugelmir

Why won't you receive the HTB bonus?

.sparrow

I'm having to withdraw the cash from the ISA to part pay the exchange deposit.

kingstreet

The reservation fee will be accounted for at completion, not exchange so you will pay the full £10k deposit to your solicitor ahead of exchange of contracts.

At completion, he will pay £500 less to the builder and this will mean your final solicitor bill will be £500 less.

.sparrow

Thanks all

Anzhelka

They will need to know the source of your deposit before issuing you an offer.
We have paid our deposit + all the fees to the seller, broker and solicitor just few days after exchange and now we are completing hopefully tomorrow or Friday. it's my Birthday today, would be nice to get a keys as a present lol

salllycinnamon

Not sure if this is too tale to be helpful? To use your help to buy ISA, you need to close the account, get the cash moved and the solicitor will claim the bonus for you using your closing account statement. You can top the payment up to the solicitor if needs be with other savings as unlikely to have the 5% deposit just from the ISA even with the maximum allowed. this is what I will be doing - hopefully!