33% deposit - very high?

nyermen

I dont really like the term deposit where it refers to the amount the buyer has in cash to put towards the property, it can cause confusion like here (unless Im misreading). I'll use "housing deposit" for now.

But I think OP is referring to the amount to transfer prior to contract exchange. 33% seems high (regardless of LTV, mortgage offers, etc). It is indeed normally less eg. 10%. Its also an issue if OP has a smaller "housing deposit" than 33% as the mortgage wont be drawn down until completion so where does the difference come from.
Who is requiring 33% - the builder? Your conveyancer? Are the builder worried you'll pull out, perhaps they have a high cancellation rate (alarm bells ring about them if so).

wesleyad

nyermen wrote: »

Its also an issue if OP has a smaller "housing deposit" than 33% as the mortgage wont be drawn down until completion so where does the difference come from.
.

That's what I was thinking. I've ever seen a situation where an exchange deposit is greater than a mortgage deposit (maybe in the days of 100% mortgages).

If OP is putting down 10% (30K) as a mortgage deposit, the then exchange deposit of 5-10% can come from that and it's no problem.

However if the sums here are correct, the OP would have to put down 100K on exchange, before then receiving 70k back on completion. Where does someone get 70k from for a week?

01afraser4

G_M wrote: »

Sigh! :wall:

Maybe just take some time to explain it in a manner they understand rather than be condescending about it? They're obviously having difficulty interpreting what you are saying.

AnotherJoe

jez9999 wrote: »

I'm still not really understanding why my being at max borrowing would affect the exchange deposit. If exchange is, say, 10 days before completion, it's the difference between me paying that 10 days before completion, and 1 day before completion - 9 days' difference. Why does this matter to them?

Because if it's a new build exchange might be 6 or 9 months before completion and the builder wants the money to provide working capital for free, it may also have further implications regarding their financial stability,

jez9999

AnotherJoe wrote: »

Because if it's a new build exchange might be 6 or 9 months before completion and the builder wants the money to provide working capital for free, it may also have further implications regarding their financial stability,

Right, well it certainly isn't in this case. The house is nearly built (probably a month to go).

[Deleted User]

Who is asking for the £100k deposit? The builder? The mortgage lender? Your solicitor? Have you asked the party asking for the £100k why they need it now?

[Deleted User]

Is this request for the £100k deposit in anyway linked to the events in your other thread?

Sale fell through - house builder unreasonable?

jez9999

Lover_of_Lycra wrote: »

Who is asking for the £100k deposit? The builder? The mortgage lender? Your solicitor? Have you asked the party asking for the £100k why they need it now?

The mortgage lender were the ones using the term "deposit". I'll be confirming what the situation is with the builder today.

[Deleted User]

Borrowing 200k on a 300k purchase. Lender wants to know where your deposit is coming from. This is the £100k difference between borrowing amount and purchase price. Your solicitor may request this prior to exchange although most are happy just to see you have it available and you will transfer it in time for completion.

The exchange deposit is usually 5% or 10% of the purchase price. This needs to be sent to the solicitor prior to exchange of contracts. If you pull out after this then you will lose this money


If its the lender asking for your deposit at this point, they just want to see proof of it and where it is coming from/has been in the past. You dont have to send them any money, usually just statements to show it is available

8ofspades

You need to look at the documentation you got from the house builder. I suspect here that you have arranged a mortgage with your 33% deposit, and the house builder is saying you now need to exchange on your deposit, but the two deposit amounts are different. Your documentation should tell you exactly how much the exchange deposit is. The exchange deposit you pay will then be deducted at completion - you will get the bill from your solicitor, pay your deposit and fees (minus anything you have already paid) and the solicitor will arrange the transfer of the mortgage funds to the house builder.

Our documentation said we were required to exchange on 5% deposit. Our actual mortgage deposit was much higher, and was all tied up at the time of exchange. We negotiated to exchange on our reservation fee instead.