Buyer only has 2% deposit

eddddy

Yazmina wrote: »

The buyer's solicitor has said that the buyer is waiting on his monthly salary to be able to complete. He's asked for exchange on 28th July and completion on 28th August. It sounds like he doesn't understand the process and we wants to make up for the shortfall in his deposit when he gets paid at the end of August.

It's not really a matter of not understanding the process.

If you were 100% sure that he would get his monthly salary and have the money to complete - that's fine, you can use your savings for your deposit and go ahead.

The risk is that the FTB is deluded or over optimistic (or lying) and won't have the money to complete.

You could then be tens of thousands out of pocket.

Crashy_Time

PField wrote: »

People used to buy houses with 100% mortgages and no deposit. How did that use to work?

Worked out great....for the bankers....not so great if you are trying to sell now, because the bubble that sort of lending caused has started to pop.

Yazmina

I think he must have the full 5% otherwise how would he have got a 95% mortgage?

AnotherJoe

Yazmina wrote: »

I think he must have the full 5% otherwise how would he have got a 95% mortgage?

Good question. Do the lenders ask to see evidence of your deposit? If the FTB did have it and now doesn't that says even more how much they are doing this on a wing and a prayer.

Thrugelmir

Yazmina wrote: »

I think he must have the full 5% otherwise how would he have got a 95% mortgage?

If the buyers solicitor is unable to exchange due to lack of deposit. Then the mortgage cannot be drawn down.

mrschaucer

Even if he HAS got a 5% deposit, the OP is still going to have to subsidise him temporarily (one hopes) by using her savings to top up the monies she will receive on exchange (5% of the value of her house) to 10% of the value of the house she's buying (as her vendor wants a 10% deposit). Normally the difference in vendor/buyer deposits both at 10% would be manageable if one has planned for it, but to suddenly have to find more because the buyer can only manage 5% would be impossible for some people. It's ok if everyone in the chain agrees to 5% (but still risky if a flaky FTB is buying from you as you'd have to sue them for the remaining deposit if things went pear-shaped, and they might not have it) but I certainly wouldn't like to be a 5% "receiver" and a 10% "giver", even if I could afford it! And the idea of exchange/completion on the same day gives me the horrors. What a rotten position for the OP.

alchemist.1

AnotherJoe wrote: »

Good question. Do the lenders ask to see evidence of your deposit? If the FTB did have it and now doesn't that says even more how much they are doing this on a wing and a prayer.

They do and Estate agents do aswell. A lot of solicitors will also ask for confirmation.

So this does leave alarm bells ringing.