Deposit confusion please help!

Keiraroo

I apologise if this has come up before I can’t find any thread about it and I’m freaking out.

We are buying our first home. It’s a new build and we are using the help to buy London scheme.

We have paid a 5% deposit of £26,000 through our solicitors/conveyancers upon exchange of contracts. The purchase price of the property is 525,000

We have been processing through this whole thing stating to mortgage brokers and in our mortgage application that we would be providing a deposit of 60,000

However our mortgage application to Barclays is requiring us to prove funds of 60,000 and we no longer have this as it is minus the 5% 26,000 that was paid on exchange so that we are left with £34,000

Have I made a mistake and not realised that we are required to pay 2 deposits? One to the mortgage lender and another to help to buy London or to simply exchange contracts?
Or is this all the same ‘deposit’
I’m so confused and worried.
Can anybody help me to work this out?

Thankyou I’m advance

I’m terrified that I’ve messed up and not understood what the 25,000 was for and that I will need to come up with more money

cjv

I would give them proof of the £26k being used for the deposit, plus proof of the £34k.

Talk to your broker, they should of told you what is acceptable as proof of funds in this situation.

da_rule

Some people will say that there are 2 deposits. The exchange deposit, which you pay to the seller on exchange of contracts and the completion deposit which you pay on completion. The completion deposit is the purchase price minus the exchange deposit minus the mortgage amount. I don’t personally think the second payment is a deposit as you are handing it over on completion rather than in advance, but that’s just semantics.

You should have proof of the £26k being transferred to your solicitor? Then you could also ask your solicitor to provide a copy of the contract and maybe a covering letter stating that on exchange they transferred the £26k to the seller.

saajan_12

Keiraroo wrote: »

I apologise if this has come up before I can’t find any thread about it and I’m freaking out.

We are buying our first home. It’s a new build and we are using the help to buy London scheme.

We have paid a 5% deposit of £26,000 through our solicitors/conveyancers upon exchange of contracts. - well you transferred it to them in anticipation of exchange. Have you actually exchanged yet? The purchase price of the property is 525,000

We have been processing through this whole thing stating to mortgage brokers and in our mortgage application that we would be providing a deposit of 60,000 - okay, so you're contributing 60k of savings. Not a deposit in the "security in case you pull out" sense.

However our mortgage application to Barclays is requiring us to prove funds of 60,000 and we no longer have this as it is minus the 5% 26,000 that was paid on exchange so that we are left with £34,000 - its a question of bank accounts. You have 34k in your bank acc and the solicitor is holding 26k in a client account for you. That money hasn't gone anywhere, it'll still contribute to the purchase price.

Have I made a mistake and not realised that we are required to pay 2 deposits? One to the mortgage lender and another to help to buy London or to simply exchange contracts? - no, you never pay a deposit TO the lender or to H2B. You pay it to the vendor via your solicitors. You just have to prove to the lender / H2B scheme that you have the 60k and thus you'll be able to complete on the purchase in conjunction to the mortgage and they'll have valid security for their loan.
Or is this all the same ‘deposit’ - yes, they overlap
I’m so confused and worried.
Can anybody help me to work this out?

Thankyou I’m advance

I’m terrified that I’ve messed up and not understood what the 25,000 was for and that I will need to come up with more money

Your contribution: 60k
Exchange deposit: 26k

These amounts can overlap ie the 26k is part of the 60k. The exchange deposit is just sitting in the solicitor's client account for you. You can ask the solicitor for a statement proving you have it. Its still your money and will form part of your contribution to the total purchase price.