How is deposit paid?

HB58

It's more than 28 years since we last moved house. It would be fair to say that I remember little about the process!

We now have buyers for our house and have had an offer accepted on the flat we like. We do not need a mortgage.

How do we pay our deposit? I seem to remember some talk on here about a buyer who didn't realise they would have to pay actual money for the deposit - as opposed to our buyer's deposit being used to pay our vendors.

Our EA has said that actual money does not have to change hands. I am aware that some EAs are happy to say what they think the asker wants to hear!

I really don't want to be in the position of finding more than £20,000 in cash at short notice because we have not understood the system :eek:

So, how does it actually work? Do we need to pay the deposit in cash or do we somehow assign our buyer's deposit?

While I am here, I might as well ask about surveys too Is a homebuyer's survey what we need, or is there something else?

Many thanks.

G_M

Normally 10% deposit is paid at Exchange of contracts.

Is the cost of the property you are buying greater or less than the cost of the property you are selling? If less, then the deposit you receive from your sale will cover the deposit you pay on your purchase, so there is no problem.

If not, then either

* you make up the difference with your cash, or
* you negotiate with your sellers to pay them a reduced deposit (8%? 5%?). This is quite common, but of course they may not agree.

HB58

Thanks G-M,

Our sale price is just a little higher than we are buying for, so it sounds as if that will be OK. We will have to use some of our savings to cover moving costs etc (we paid a little more than we wanted to, but it was worth it!) but at least we won't have to get our hands on the deposit as cash!

PlaysNicely

:wave:

We're in the same position as yourself ... we have cash buyers and will be making our purchase from our equity. As its a downsize for us, we're buying for less than we're selling for, so our buyers' 10% deposit for our house will more than cover the 10% we need for deposit on our purchase. So the solicitor will do the necessary at exchange using our buyers' funds to fund our deposit: we won't need to have anything in the bank. I'm guessing it would be similar for you if you are buying at a lower or similar cost to your sale price.

For survey, we had the next up from a homebuyers survey, as there were a couple of suspect areas we were already aware of with our potential purchase and because it's in a flood risk area and its a probate sale, we needed someone to have a good look to check for historic flood damage or any of that kind of malarkey.

So, this resulted in a report which was more in-depth than homebuyers but not as intrusive as a full specialist engineer report: we'd have had one of those if anything worrying arose from our initial survey. I'd say to instruct whichever kind of report seems right for the type / age / location of the property and will be most suitable for answering any concerns you may have or reassurance you need about putting your money into your chosen purchase.

Good luck with it all. PN x