Property Purchase - Deposit?

AnnFinancialQs

Sorry if this has been asked a lot before! I've looked around and can't quite find the answer.

I'm a FTB purchasing a property for 200k. On my mortgage I am putting a deposit of £70k down and borrowing £130k.

However, this is the bit that's confusing me. It's looking that I need to also send a 10% deposit on exchange of contracts. So that means another 20k.

So, should I in fact be borrowing £110k for the mortgage, instead of £130k? As 20k will need to be used on exchange of contracts.

Hopefully that makes sense, I'm very confused!

p00hsticks

AnnFinancialQs wrote: »

Sorry if this has been asked a lot before! I've looked around and can't quite find the answer.

I'm a FTB purchasing a property for 200k. On my mortgage I am putting a deposit of £70k down and borrowing £130k.

However, this is the bit that's confusing me. It's looking that I need to also send a 10% deposit on exchange of contracts. So that means another 20k.

So, should I in fact be borrowing £110k for the mortgage, instead of £130k? As 20k will need to be used on exchange of contracts.

Hopefully that makes sense, I'm very confused!

no you should be borrowing £130k.

You pay a 10% deposit on exchange - £20k. This is held intially by your solicitor and then on exchange by the sellers solicitor.

Then for completion you (or rather your solicitor) hands over the remaining £50k of your deposit and the £130k from your mortgage provider to make up the full £200k purchase price.

AnnFinancialQs

Ahh! It makes complete sense now, thank you. I was very confused, thinking that two lots of deposits have to be paid, one on the mortgage and one on the exchange of contracts. But in fact the deposit and the mortgage are separate.