Any difference

jamie_128

My solicitor was planning on using proceeds from my house sale as deposit for the house we are buying as opposed to us paying her the deposit beforehand.

Is there any benefit/negative to doing it via the house sale as opposed to beforehand? Im told the excess money will just be transferred into my bank or a cheque.

Is there any benefit to doing it either of the ways?

AdrianC

Passing the deposit up and down the chain is the standard way of doing it. There's no reason not to, unless you're planning on breaking the chain.

I presume by "excess money", you're down-sizing in price?

jamie_128

No i just have double what we decided to put as a deposit on the next house, we are upbuying but keeping money to do stuff to the house.

I was more concerned about risk of transferring the deposit on completion day slowing things down but i suppose they have to transfer the mortgage regardless so??

jamie_128

Im confused now, all ive read so far says you pay the deposit on exchange of contracts? but thats a week or two before we complete, if its coming out the house sale how does that work?

purpleumbrella

jamie_128 wrote: »

Im confused now, all ive read so far says you pay the deposit on exchange of contracts? but thats a week or two before we complete, if its coming out the house sale how does that work?

'Deposit' is used to mean two different things:

The exchange deposit, typically 10% of the purchase price, is paid on exchange of contracts. The deposit from your sale will then be used as the deposit on your purchase.

The mortgage deposit is the difference between the purchase price of the property that you are buying and the amount that you are being lent.

Slithery

jamie_128 wrote: »

My solicitor was planning on using proceeds from my house sale as deposit for the house we are buying as opposed to us paying her the deposit beforehand.

Are you exchanging and completing at the same time? If not it is possible although very unusual to do what you are saying. Has your solicitor confirmed that this is acceptable to your vendor?

jamie_128

We are completing 2 weeks ish after exchanging or 1 week at this rate its taking ages.

G_M

purpleumbrella wrote: »

'Deposit' is used to mean two different things:

The exchange deposit, typically 10% of the purchase price, is paid on exchange of contracts. The deposit from your sale will then be used as the deposit on your purchase.

The mortgage deposit is the difference between the purchase price of the property that you are buying and the amount that you are being lent.

This.
Do not confuse or equate the 'exchange deposit' (usually 10% but may be less by agreement with your seller) with your 'mortgage deposit' (which could be any amount eg 40%, 63% 90% of the purchase price.


The Exchange deposit on your purchase gets paid at ... umm.. Exchange! You can pay this with cash, or as you are also selling, use the Exchange deposit you receive the same day on your sale.


At Completion, you pay the outstanding 90%. This is usually a combination of your mortgage funds, + your mortgage deposit (ie your personal money).


Your solicitor will need both (plus enough for their fees, your estate agents fees, and your SDLT) in advance of Completion.

jamie_128

My head is baffled, im basically being told the money i have in my house can be used as deposit for exchange of contracts but thats not enough and im not being asked to transfer any more money either.

From what i have read online it says that the deposit from the first person in chain (our buyer) is basically used as our deposit for the house we are buying? Thats less than 10% but ive read its common for this to be the case?

And if the house we are buying is not happy with the smaller deposit they can request us to make up the difference so its 10% upon exchange? Does this happen often? As if so id rather just pay it to save delays.

AdrianC

jamie_128 wrote: »

My head is baffled, im basically being told the money i have in my house can be used as deposit for exchange of contracts but thats not enough and im not being asked to transfer any more money either.

Perfectly normal in a chain.

The buyer at the bottom puts their 10% in.
That gets promised up the chain to the top. The %age gets smaller. But everybody trusts everybody else - or, at least, every solicitor trusts the solicitor below them.

jamie_128

So is it unlikely the house we are buying would push for more deposit then? And just rely on what our buyer transfers?