FTB panicking about exchange deposit vs mortgage deposit

juniordoc

Rises in stamp duty usually due have a lead-in time before implementation as otherwise those halfway through purchase could find themselves unable to foot the bill.
Cuts in stamp duty have previously come in with almost immediate effect, otherwise everyone would stall in buying and grind the whole market to a halt.
Here's hoping!

Lysimache

G_M wrote: »

for what?

if you mean for the cash a buyer is putting up (as oposed to mortgage), then no - that's not what a 'downpayment' is.

if you mean for the deposit payable at Exchange, then no, 'deposit' is a perfectly good Engish word.

Isn't a downpayment the mortgage deposit money? Hence I suggest using downpayment to refer to that.

Whereas using the word deposit would make sense for the payable at Exchange to keep the property...

ThePants999

I quite like that. Downpayment being primarily a finance term, meaning the bit you pay when funding the rest with some sort of credit, is a sensible replacement for mortgage deposit. Whereas deposit, being primarily a contract term, is a sensible word for what you have to lodge at exchange of contracts.

Lysimache

Time to spread the word among mortgage companies and conveyancers then

faldo

saajan_12 wrote: »

You only need one lot of £24.5k (+fees) not two. And breathe.

Exchange deposit = 10% of purchase price as standard. This is paid upon exchange, if you subsequently fail to complete (very unlikely) then you lose this.

Mortgage deposit = Purchase price - Mortgage loan. This isn't really a 'deposit' in the sense of securing the purchase, it's just your contribution to the purchase. On completion, the lender sends their 90% and you top up any monies. Since you've already paid 10% on exchange, there's £0 for you to top up. If you had a 85% loan and 15% deposit then you'd pay 10% on exchange and top up 5% on completion.

Hi Saajan_12. I really like the way you explained this so thought id ask. What if I have no contribution to a purchase besides the money ive put in a help to buy ISA, which with my money and bonus combined , would amount to 5% of the total property cost. Would I need to find another 5% for the exchange deposit? I thought some help to buys allowed you to purchase with 5%? or are all exchange deposits at 10%?

kingstreet

5% is the maximum for exchange of contracts on HTB Equity Loan, so the developer and the solicitors know it won't be 10%.

In other cases, solicitors can negotiate on behalf of their clients for a lower percentage to be accepted.