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Do you need a deposit when you are selling one house and buying another?
Comments
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The point of the deposit is to ensure everyone has a vested interest in proceeding.
The problem in insisting that everyone pays their own 10% is that people haven't got that money, it is tied up in the value of the property.
If you are selling at 170k and buying at 200k, you could be increasing your mortgage by 20k, contributing 10k of savings plus you costs, so you haven't got 20k available for a deposit. As you go up the chain it gets worse.
The method currently used actually works, even in cases where a chain fails. Chains fail in 99.9% of cases before exchange not after. The only time I've heard of a chain failing after exchange before completion is when the owner died.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
The point of the deposit is to ensure everyone has a vested interest in proceeding.
Doesn't the fact it's a legally binding agreement do that?The problem in insisting that everyone pays their own 10% is that people haven't got that money, it is tied up in the value of the property.
True, which means they haven't got the money to pay the compensation to their seller and return the original deposit to their buyer should things go wrong.If you are selling at 170k and buying at 200k, you could be increasing your mortgage by 20k, contributing 10k of savings plus you costs, so you haven't got 20k available for a deposit. As you go up the chain it gets worse.
This is exactly why I see my money disappearing up the chain will be hard to get back.The method currently used actually works, even in cases where a chain fails. Chains fail in 99.9% of cases before exchange not after. The only time I've heard of a chain failing after exchange before completion is when the owner died.
We have all agreed all along that failure after exchange is rare. But in the unlikely event it happens then who gets what share of the 17,400 that I originally paid in the example? I am simply asking for the details of how it works if anyone knows which it seems they don't as the question is unanswered.
And why not just dispense with the deposit if failure to complete after exchange is so rare?0
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