Exchange & Completion Deposit - Confused :-(

DippyHippy86

Hi everyone!

I hope someone can help me understand this as I am sooo confused with conflicting information.

I am in the process of purchasing a house for £135k & have agreed with the bank that we will be putting down a 10% deposit - £13,500.

We will be purchasing with a Help To Buy ISA but understand that the bonus can't be used for exchange deposit.

My solicitor has stated that we can exchange & complete on the same day but I have seen that this is not really recommended & can be stressful.

So my questions are:

1) If I am to exchange on a separate date from completion, can I put down £6750 (5%) with remaining money & bonus to follow on completion - making 10%. If I put down 5% on exchange, this won't affect my mortgage offer will it?

2) On date of exchange, can I close my ISA account, get my closing statement, transfer £11893.84 funds & still receive a £1606.16 bonus to add at completion?

3) If I complete & exchange on the same day, will the £1606.16 bonus be added to my £11893.84 to make up the 10% deposit?

I am unsure what the best option would be for me.

I would prefer to exchange before completing if possible.

Help!! Lol!

Cakeguts

You have to pay the 10% deposit at exchange. That is what you have agreed with the bank.

marliepanda

Cakeguts wrote: »

You have to pay the 10% deposit at exchange. That is what you have agreed with the bank.

I thought exchange deposits had nothing to do with the bank and everything to do with the solicitor?

You should be able to negotiate a lower exchange deposit with the solicitors, as if you are putting down a 10% deposit which includes your HTB bonus then you won't have that available at exchange, only on completion. (I'd check how long it takes your ISA provider to close the account and provide the statement, some do it almost instantly, some take ages and post out the statement)

G_M

DippyHippy86 wrote: »

So my questions are:

1) If I am to exchange on a [STRIKE]separate date from[/STRIKE]in advance of completion, can I put down £6750 (5%) yes, if your seller agrees with remaining money & bonus to follow on completion - making 10%. no. You would pay the remaining 95% on Completion If I put down 5% on exchange, this won't affect my mortgage offer will it? Correct.

2) On date of exchange, can I close my ISA account, get my closing statement, transfer £11893.84 funds & still receive a £1606.16 bonus to add at completion? Ask your solicitor. But I believe the HTB ISA can only be released at Completion. I might be wrong.

3) If I complete & exchange on the same day, will the £1606.16 bonus be added to my £11893.84 to make up the 10% deposit? If you Exchange and Complete on the same day you do not pay a 10% deposit. You pay 100% of the purchase price, using money from your various sources.

If you exchange in advance, you need

* to find the 10% Exchange deposit from somewhere. Not, I believe from the ISA
* or you need the seller to agree to to a smaller Exchange deposit eg 5%


If you Exchange and Complete simultaneously
* there is no Exchange deposit
* you pay the full 100% on that day, using the mortgage, and your savings

thermal2844

Regarding the HTB ISA, our solicitors advised us that it would take 10 days to close, and a further 5 days for the solicitor to process.

marliepanda

thermal2844 wrote: »

Regarding the HTB ISA, our solicitors advised us that it would take 10 days to close, and a further 5 days for the solicitor to process.

This varies so the OP needs to contact their bank and solicitor. I had mine with Santander and I closed it and got a completion statement in minutes at the branch. Another friend was with I think HSBC (don't quote me) and his was posted out to him so took much longer.

My solicitor did not need 'processing time' I just sent them the form and they rolled it up into my fees invoice.

saajan_12

DippyHippy86 wrote: »

Hi everyone!

I hope someone can help me understand this as I am sooo confused with conflicting information.

I am in the process of purchasing a house for £135k & have agreed with the bank that we will be putting down a 10% deposit - £13,500. - this really means total 90% LTV or £121.5k loan.


We will be purchasing with a Help To Buy ISA but understand that the bonus can't be used for exchange deposit.- correct, this is released on completion,

My solicitor has stated that we can exchange & complete on the same day but I have seen that this is not really recommended & can be stressful.- if you're not selling at the same time and planning to move a few days / weeks after completion, then doesn't really make a difference. If not, it definitely helps to have a gap once the transaction is confirmed (exchange) to get removals etc arranged.


So my questions are:

1) If I am to exchange on a separate date from completion, can I put down £6750 (5%) with remaining money & bonus to follow on completion - making 10%. If I put down 5% on exchange, this won't affect my mortgage offer will it?- Thats fine as long as you agree with vendors (via solicitors) that a <10% exchange deposit is acceptable (you'll likely be liable for the full 10% if you fail to complete though). Also is the "remaining money" coming from your savigns or somewhere else? If somewhere else then your lender will need to know and okay this. Any reason you can't you get the remaining (non bonus) money earlier?

2) On date of exchange, can I close my ISA account, get my closing statement, transfer £11893.84 funds & still receive a £1606.16 bonus to add at completion? - ask your bank / check your T&Cs from when you opened the ISA?

3) If I complete & exchange on the same day, will the £1606.16 bonus be added to my £11893.84 to make up the 10% deposit? - check with your bank / ISA T&Cs on how this process works

I am unsure what the best option would be for me.

I would prefer to exchange before completing if possible.

Help!! Lol!

Responses in line. Main points are
1) You'd need to agree a lower exchange deposit in writing with vendor via solicitors (very common but needs formalising)

2) Check with your bank on how the process works re getting the bonus and how much notice they need.

DippyHippy86

Thank you for your help everyone!

I think I understand the process a bit better now.

It would probably make sense to use being first time buyers to exchange & complete on same day then :-)

marliepanda

DippyHippy86 wrote: »

Thank you for your help everyone!

I think I understand the process a bit better now.

It would probably make sense to use being first time buyers to exchange & complete on same day then :-)

Not really...

I mean there are definitely reasons to do it, and reasons not to do it. FTB status doesnt make any difference.

DippyHippy86

marliepanda wrote: »

Not really...

I mean there are definitely reasons to do it, and reasons not to do it. FTB status doesnt make any difference.

This is why I want to make sure I am doing the right decision as I don't want anything to cause delays, I want to make sure we still get our bonus etc.

Do the reasons for outweigh the reasons not too or vice versa?

I am a bit hesitant to do both on same day, but if it will mean we will have more of a cash pot at the end after completion, I am more inclined to.

DippyHippy86

saajan_12 wrote: »

Responses in line. Main points are
1) You'd need to agree a lower exchange deposit in writing with vendor via solicitors (very common but needs formalising)

2) Check with your bank on how the process works re getting the bonus and how much notice they need.

Thank you for your help :-)

My money is from my savings & Help to Buy ISA.

Collectively I would have enough to pay 10% on exchange but wanted to know if I could close my ISA, get the closing letter so I could withdraw my funds for exchange, then have bonus added to funds later. I will be asking the bank about that as you suggested x