Deposit required on house purchase?

reg091

We are very close to exchange on this scenario:
Selling our house for £389K
Buying house for £445K
Funds for purchase of new house obviously coming from sale of existing, plus a new mortgage.

Solicitors are saying that we cannot exchange until we lodge a 10% of purchase price deposit with them i.e. £44,500

I understand the requirement for a deposit if you are first time buyers but not when it is an ongoing sale/purchase situation.

Is this right? Where are we supposed to find that money?!! I thought the whole point of completion day was that was when all the funds got transferred around and everyone gets paid their full amounts.

anselld

Ask them why they have not accounted for the £38,900 deposit from your buyers. You might need to make up the remaining £5,600.

kinger101

Normally, the deposit you received (£38,900) would be passed up the chain. You need to make up the difference (unless your vendor agrees to a lower amount).

SG27

I asked my solicitor about this situation when we met a few weeks ago.

You still need to pay the deposit on exchange whether a ftb or not. You will get 10% so £38,900 deposit from your buyers. Normally your solicitor will have negotiated with your sellers solicitor to pay the a deposit of £38,900 instead of £44,500 for the house you are buying so less than 10% and this can be passed up the chain.

reg091

The actual wording from the solicitor is: Please send via the banking system 10% of the purchase price or the difference between your mortgage if obtaining one, and the contract price (unless obtaining a 95% mortgage).

agrinnall

It's late in the day, but I'd seriously consider finding a different solicitor who actually knows how to buy and sell houses, because it seems like this one doesn't have a clue.

saajan_12

reg091 wrote: »

The actual wording from the solicitor is: Please send via the banking system 10% of the purchase price or the difference between your mortgage if obtaining one, and the contract price (unless obtaining a 95% mortgage).

Sounds like a default response for a FTB. Instead of trying to further understand the precise wording, just query this with the solicitor:

"Dear Solicitor
Have we received the 10% deposit from the sale of xyz? Please confirm this £38k will be passed up the chain.
Also, could we negotiate the vendors accept a lower deposit of £38k for the purchase of abc
Thanks,
reg"

wesleyad

Yeah some mistake, else they would be expecting deposits on situations where you were downgrading, which clearly makes no sense (eg you were selling for 450 and buying at 380)

SG27

reg091 wrote: »

The actual wording from the solicitor is: Please send via the banking system 10% of the purchase price or the difference between your mortgage if obtaining one, and the contract price (unless obtaining a 95% mortgage).

Give them a call. They have probably forgotten what your situation is and sent a standard email out.

PasturesNew

As others have said, they're not expecting the 10% - you need to just point out to them that the 10% is in your equity.

What happens if the chain exchanges and fails... is you would then be "forced" to hand that amount over...

Deposits are rarely "actual cash" after the first purchase. It's more of a "promise to pay" you're making in your transaction.

Either you or the solicitor is misunderstanding the wording or the situation.

reg091

Sadly, a bit of searching suggests that I absolutely do have to pay:

https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/how-do-i-exchange-contracts/
http://www.fridaysmove.com/deposit-%E2%80%93-when-buying-property/15506