Exchange deposit and mortgage deposit.

Sncjw

I’m really confused.

Been reading martins guides on house buying and he has talked about two deposits. The exchange deposit and the mortgage deposit.

Does this mean I need two lots of 10% then. If I do I will be panaciking massively. I have just placed an offer on a house and waiting to hear back from vendor.

Thank you

eddddy

Sncjw wrote: »

Does this mean I need two lots of 10% then. If I do I will be panaciking massively. I have just placed an offer on a house and waiting to hear back from vendor.

No - you (probably) don't need 2 deposits.

Maybe these examples will help:

• Usually, you need to pay a 10% deposit on exchange of contracts.

• If you're getting a 90% mortgage, there is no more 'mortgage deposit' to pay on completion

• But if you're getting an 85% mortgage, there is an additional 5% 'mortgage deposit' to pay on completion.

• Or if you're getting an 80% mortgage, there is an additional 10% 'mortgage deposit' to pay on completion.

• Or if you're getting an 60% mortgage, there is an additional 30% 'mortgage deposit' to pay on completion.

etc, etc

But some solicitors like you to transfer the full 'mortgage deposit' to them at exchange of contracts (instead of completion) - so that everything is ready in advance.

Plus there are costs like solicitors fees, stamp duty etc. Again many solicitors like you to transfer this across at exchange of contracts - so everything is ready in advance.

Sanne

It’s one deposit - at exchange you pay 10% of the purchase price to your solicitor, at completion whatever is left to pay (purchase price + fees + anything else that may have been agreed such as buying appliances - mortgage - the 10% you paid at exchange).

So if you or down say 15% you’ll pay the 10% at exchange and 5% plus any other outstanding costs at completion.

G_M

Use of the word 'deposit' in relation with the 'mortgage deposit' is and always has been misleading and confusing. Hence the endless questions here!

It really describes the personal cash (savings whatever) that the buyer is contributing to the purchase price. It is not really a 'deposit' at all.

The purchase price consists of the amount borrowed (the mortgage) and the amount the buyer has saved already (the so-called 'mortgage deposit').

This has nothing to do with when money is handed over - usually 10% deposit at Exchange and 90% at Completion.

SDLT_Geek

The word "deposit" is used to mean different things.

The first meaning is the amount you pay to your seller (through the conveyancers) at exchange of contracts as an earnest for completion. This has to be real money. But if you are selling a property, the buyer of your property might give your conveyancer a 10% deposit in real money which can be used "up the chain" by you as your deposit on your purchase. If you have no real money to add to it you might be asking your seller to accept a deposit of less than 10%.

The second meaning of "deposit" is a looser one, being the difference between the value of the house you want to buy and the amount you want to borrow. I might prefer to call it "equity" rather than a deposit. Lenders often look at what % equity a borrower is putting in so they can see what the loan to value ratio is when they assess the risk to them in lending money.