Paying deposit at exchange

newbieFTB

[SIZE=-1]This is probably a very basic Q but as per my username I'm a newbie FTB! I was wondering roughly how much notice is normally given of the exchange date?

I'm buying a house with a Nationwide mortgage... my deposit is made up of premium bonds, a Nationwide Save to buy savings account (although it's not a save to buy mortgage) and an ISA.

I know the deposit is required at exchange - ideally I'd use the deposit funds from the Nationwide save to buy account and the premium bonds, rather than the ISA.

I don't have any other Nationwide accounts (other than my future mortgage) so can't easily transfer the money out of the savings account - meaning the only option is a 'counter cheque' which I believe is a cheque made out to me given over to me at the branch. I'd then pay this counter cheque into my current account and when it's cleared transfer to the solicitors account in time for exchange.

All self explanatory but this will obviously take a few days to arrange and for the cheque to clear, I'm wondering how much advance notice is 'normal' of the exchange date. Obviously I could just transfer the money out of the Nationwide savings account now but you are only allowed one withdrawal per year without sacrifising the interest rate so if I transferred it now and for any reason the sale fell through I'd lose out on the higher interest rate.
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kingstreet

There is no 'exchange date' target as such.

When all the paperwork is back and acceptable, the solicitors in the chain ask their clients for their preferred completion dates. When a date has been adopted on which all agree, then contracts can be exchanged.

Your solicitor will therefore ask for your signed contract and deposit when he/she intends to put your preferred completion date(s) to the other parties in the chain.

newbieFTB

Thanks, sounds like there's not really a solution to me getting the money out of the savings account in time then - other than when they ask everybody to exchange, saying I can't exchange for a week or so due to needing time to access the money?

HB58

Could you explain the situation to your solicitors and ask what they suggest?

G_M

First, do you understand the difference between the 10% deposit you need to pay at Exchange, and the 'deposit' you are providing Vs the mortgage amount you are borrowing (which may be 5%, 10% 15% 50% or any other%)?

2) What gap do you plan between Exchange and Completion? If none, or small, then you'll need to provide the entire amount you are contributing to the purchase at Exchange (not just the 10% deposit).

3) The amount of interest you will earn on any of those acounts (except the premium bonds which might earn you £1m) is so small it's not worth worrying about.

Liquify them all in good time and stick in your current acount. OK, for a few days or weeks they will earn zilch. But compared to the cost of the purchase, the lost interest is like a raindrop falling into the sea.

newbieFTB

G_M wrote: »

First, do you understand the difference between the 10% deposit you need to pay at Exchange, and the 'deposit' you are providing Vs the mortgage amount you are borrowing (which may be 5%, 10% 15% 50% or any other%)?

It's a 90% mortgage, so if I understand correctly the 10% deposit I pay at exchange is the same as the mortgage deposit

2) What gap do you plan between Exchange and Completion? Is none, or small, then you'll need to provide the entire amount you are contributing to the purchase at Exchange (not just the 10% deposit).

Ideally I'd like two weeks as the conveyancers I'm using charge extra for a gap of less than 10 working days between exchange and completion.

3) The amount of interest you will earn on any of those acounts (except the premium bonds which might earn you £1m) is so small it's not worth worrying about.

Liquify them all in good time and stick in your current acount. OK, for a few days or weeks they will earn zilch. But compared to the cost of the purchase, the lost interest is like a raindrop falling into the sea.

It's not missing out on a few days/weeks interest that bothers me, if I transfer the savings early and for any reason the purchase falls through at this early stage, then I'll have used my one allowable withdrawal meaning that I lose the higher interest rate on the whole of my save to buy account

Thanks G_M, have replied in red above - whilst I might be concerned about using the one allowed withdrawal unfortunately I don't think there's anything I can do other than what you've suggested in point 3 - apart from say I need a week to get the money together when the solicitor says we're ready to exchange.

The deposit is all my personal savings (and declared as such on the mortgage application). Is it allowable for a relative to lend me the cash short term for a week so I can pay the deposit when requested and then I repay them? I'm guessing it's not OK as even though the funds would have come from my current account (after being put in there by a relative) they'd be classed as a gifted deposit, even though it's for a short time?

G_M

Hmmm...

I assume that at some point during the conveyancing process your conveyancer (or the lender's solicitor if you are doing your own conveyancing?) will want to check your source of finance for moneylaundering purposes etc.

You will show him your account details and Bond holdings etc, and he will be satisfied.

Thereafter he will not really care, or know, about the precise source of funds. As Exchange approaches, he will ask you to transfer £X to his account in readiness for Exchange.

Rather than lose your ISA entitlement, and savings account rate, in case Exchange is cancelled, you could get a family member to transfer the money to you, and you transfer it to him.

Once Exchange has happened and you are (99.99%) guaranteed the purchase will go through, you could then close your various accounts and repay your family.

newbieFTB

Thanks again G_M, I've already provided proof of deposit to the solicitors at the beginning (around a month ago). Having never bought a house before (newbie FTB!) I don't know if they ask to see proof of transfer of the funds which were declared as deposit at the outset though.