How does the exchange side work?

Doodlebug5

So we currently live in a property that my parents bought for us. It's in their name and they have very kindly gifted the difference between what we sell it for and the mortgage. It works out about 78k. We will pay the capital gains tax on the property and minus solicitors and estate agent fees so effectively we have a £62500 deposit.

We have now sold our house and have been looking for houses.
We have fallen in love with a new build and are going down the help to buy route as we are first time buyers. They are requesting the deposit 4-6 weeks before completion on exchange date. Does this mean we have to find the £60k elsewhere or how does it work? Or do we sell our house and move out then when those funds are released we then buy our house? I'm very confused and not sure how it works? Anyone know?

Thanks
Doodle

HouseBuyer77

The deposit for exchange of contracts is usually 10% of the sale price. It is not the same as the deposit most people talk about (i.e. the cash you put towards the purchase price, the rest being the mortgage).

A lower one may be negotiable you need to ask them (many people don't have 10% in cash but lots of equity so it's a common situation).

Doodlebug5

Ah ok they have asked for a 5% deposit... makes sense! They have said they will work with us if we use their mortgage brokers of course. Thanks that makes sense!

SmlSave

I would strongly recommend not using the mortgage broker or solicitor pushed on you by the developers without doing your own research.

G_M

Doodlebug5 wrote: »

So we currently live in a property that my parents bought for us. It's in their name and they have very kindly gifted the difference between what we sell it for and the mortgage. It works out about 78k. We will pay the capital gains tax on the property and minus solicitors and estate agent fees so effectively we have a £62500 deposit.
Not sure what relevance the above has. So you have £62.5K cash. OK.

We have now sold our house and have been looking for houses.
Errr really? Where are you living then? I suspect you mean you have found a buyer, but not yet sold?

We have fallen in love with a new build and are going down the help to buy route as we are first time buyers.
Each to their own I suppose. But 'falling in love' with a New Build seems like a contradiction of terms.... !

They are requesting the deposit 4-6 weeks before completion on exchange date.
It is normal to make a 10% (or other agreed amount) down-payment (deposit) at Exchnage.

Does this mean we have to find the £60k elsewhere or how does it work?
You have not said how much you are paying for the New Build, or what % deposit they want, so we don't know how much you need to find.

Or do we sell our house and move out then when those funds are released we then buy our house? I'm very confused and not sure how it works? Anyone know?

Thanks
Doodle

Provided you can find the 10% (or whatever) to pay at Exchange, you can pay the remaining 90% from a combination of sale money, mortgage and cash at Completion.

I agree with Sml - do NOT use their recommended conveyancer, or financial advisor. Find someone who is unconnected wth your seller and will work for you, with no conflict of interest.

steeeb

Is it leasehold or freehold? (Nothing to do with your question - but do beware of new build leaseholds).

eddddy

If I'm understanding your post correctly, it's an unusual situation....

Your parents are selling a house, and you are buying a house.

The transactions need to be linked - you want to exchange and completion on both properties to be simultaneous

On completion, the funds from your parents' sale will be gifted to you, so that you can complete your purchase.

Because you don't have access to £60k (or £30k) - You want the deposit paid to your parents on their house to "move up the chain" to form the deposit on the house you are buying.

If you explain the above to solicitors, I suspect it's easily achievable - but it would involve extra legal work (so extra fees). And it's probably not a job for a 'conveyancing warehouse' type firm.

But a good solicitor should still be able to quote a fixed fee, if you give them all the info up front.