Mortgage deposit and exchange deposit - the same? Separate?

achysTop

I apologise in advance for such a stupid question but I can't find a clear yes/no answer about this anywhere.
My partner and I are FTB, have a AiP for 85% LTV on a 90k property and have had the offer accepted by the sellers.
We have £16k in savings, £13.5k of that is going towards the mortgage deposit, leaving us with £2.5k. The savings balance goes up by 1-2k a month by that's just a side note.

Our solicitors have asked us to confirm that we can provide 10% of the purchase price, so 9k, at exchange.
Do we need two separate 'pots' of money -- one pot with the 13.5k mortgage deposit and one with the 9k exchange deposit? 
Or do we give the solicitors the whole 13.5k? 

The latter seems like the most sensible/likely/logical to me but I'm really concerned about if we need to pay 13.5k and 9k as two separate amounts. We won't be in a position to buy for another 6 months if that is the case.

tasticz

Hi, I am not sure of the exact terminology used in the contracts but as a buyer, your solicitor is basically offering 10% of the purchase price to the seller solicitor as a collateral. We also had that when my parents purchased their property. From what I know this is pretty common. 

If you don't complete after exchanging, you'll lose the 10% and any other additional costs by the seller. 

If your purchase amount is £90k and you have 15% deposit. You'll need to send your solicitor £13.5k in total and the rest will be sent by the mortgage company. 


Whether you send £9k first and then £4.5k after or all at once does not really matter. The money needs to be with the solicitor when they ask for it. 

If I was you,  I'd send the whole 15% (£13.5k) to solicitor in one go and let them finish off the deal for you. The reason why I say this is because the solicitors usually charge £20 - £50 every time money is sent to their account for transaction.

Not trying to scare you but, confirm the solicitors bank account via phone before sending any money. This way you know it is legit bank account. 

Also, don't forget the £13.5k does not include solicitors fees. You'll need to be able to settle this as soon as they send their invoice also. 

All the best

greatcrested

Confusingly they are different.

You are borrowing 85% of the purchase price, so what is known misleadingly as the 'mortgage deposit' is 15%.

At Exchange of Contracts, it is standard to pay a 10% 'contract deposit', with the remaining 90% payable at Completion (which is also when the mortgage lender will release their loan - the 85%).

If you are Exchanging and Completing on the same day (very common these days), then it makes no difference: you give your solicitor your 15%, the lender gives him their 85%, and it all gets paid together.

If there is a gap, say a week, between Exchange and Completion, you could give your solicitor 10% for Exchange, then another 5% a few days later ready for Completion though probably easier to transfer it all together.

If the gap is larger, say a month, then it makes more sense to pay the 10% and then the 5% later.

achysTop

Thanks both, I am indeed an idiot!
My concern was that I'd be paying £13.5k and £9k (i.e. total of £22.5k) and would get the £9k back after completion or something daft. We'll just give the solicitor the whole 15% when it's requested.

Now to wait for the seller to have probate granted, I'm not holding my breath about that happening any time soon.

Flugelhorn

it'll sort out -the solicitor will ask for the 10% at exchange - you send them more and they can hold it in account for you , then they will send you a  "completion statement" which is the final amounts needed at completion including their fees, searches, money transfer costs, ID checks etc etc (if they haven't already been paid for )