Buying New Build - Questions

cleverly

Hi All

Been searching the forums for a couple of days as I have some questions around buying a new build off plan. I will be using HTB and have 5% deposit saved up. I think I am getting myself confused around deposits, can someone help clear it up?

I am waiting to start negotiating on the price of the house which should be this week. House is currently priced at £260k, will be looking to get the price down but have the 5% deposit for the full price if needed. I have paid £500 refundable reservation fee for the plot. The builders (Taylor Wimpey) have said that once price is agreed they look to exchange contracts within 28 days, this isn't an issue, we are first time buyers so no chain

I am confused around exchange of contract deposit and mortgage deposit. My understanding was the 5% deposit was used around the completion date along with the money from the mortgage to complete on the house? However I see a lot of posts that a deposit is needed at exchange of contract. What is this deposit? Does this replace the deposit that would normally be used at completion?

Sorry if I am asking basic questions, but any help is appreciated.

Thanks

Sion

kingstreet

Your 5% deposit is paid to your solicitor ahead of exchange of contracts.

cleverly

Thanks for the help, so on completion there is no additional deposit needed? Just the mortgage company to pass their funds?

kingstreet

If you were putting down 40% in total, you would havnd over 10% ahead of exchange of contracts and the remainder ahead of completion.

If you have only 5%, that's what's handed over ahead of exchange.

Your solicitor obtains the mortgage and HTB funds ahead of completion.

cleverly

Thank you for your help!