At which point do they need to see you have the entire deposit?

clamdreamer

Hi all, I hope you're all well during these uncertain times. I'd like some advice on how I can approach an offer for a flat I'm interested in.

It's a 2 bed conversion flat in London that I really like and have booked a second viewing for the weekend. It's on the market for £295,000 which I believe to be a really reasonable price based on sold prices in the area and even considering the market's uncertainty. I think I'm going to make an offer regardless but I'm torn on how to approach it.
As mentioned, I think the price is already a steal but I'm hoping that an offer of £287,500 would be accepted (I know, a massive IF). I know most lenders are only lending up to 85/80% and I've been really focusing on having a 20% deposit which would be £57,500. My savings are currently at £56,500 and I save £1,000 every month, sometimes a couple hundred more. From this forum I'm aware of the length of time that can pass before the parties reach exchange and so I know by that time I would have the 20% deposit ASSUMING  a £287,500 purchase price.

I've spoken to a broker recently and they also found reasonable deals where I had £50k deposit for a £290k purchase so in any case I know I have the finance available to offer more money and/or have a slightly smaller deposit %.  
If the vendor were to agree to my offer of £287,500 (or £290k), do you think there's sufficient time within the house buying process for me to have a 20% deposit by the time I am required to prove it/actually have it? (Is this at the stage where I apply for a mortgage or does the vendor have an interest?) 
This may be a stupid question so I'm sorry if it is but any advice would be greatly appreciated.

I know at the end of the day the vendor can say no and I'm fine with that. I've been searching for quite a long time but something comes up each time (Brexit/election/covid) so I really have learnt patience, I know I'll find a place eventually  . 

Thanks in advance  

anerise

I had to provide proof of deposit to the estate agent when our offer was accepted before they would take the house off the market. And then again when doing initial paperwork with the solicitor and during my mortgage application. So best to have everything ready before you make the offer.

jon81uk

We're using help to buy so it may be different, but our mortgage broker wanted to see proof of deposit before getting the final mortgage approval. We haven't exchanged yet but we will need to pay the deposit on exchange and the solicitor also wanted proof of funding before they would start work on the conveyancing.
The solicitor may be happy seeing that you are  £1000 short but that you will have the money at point of exchange I wouldn't expect that to be a problem, but for the mortgage it could be harder as banks aren't always as flexible. Try asking a mortgage broker?

MovingForwards

Depends on the lender.
Mine was happy to see I had been consistently saving and would have the deposit together by exchange. (pre-Covid application, completion during lockdown).

Didn't have to provide anything aside from proof of ID to the EA.

AdrianC

When you place your offer, the EA will require proof of proceedability - which means you're going to need to show them equity + DiP for at least enough to cover the offer amount. The precise proportions are the lender's issue, not the vendor's.

Do you have a DiP from a lender? How much?

clamdreamer

Thanks for your responses.
What I'm gathering is that the EA may or may not want to see thorough proof but by the time I've engaged a solicitor they'll likely want proof and most definitely the lender will.
Since my broker has indicated that I can afford a £290k purchase with a £50k deposit, would you go ahead and offer anyway and then see where your deposit is at by the time the solicitor needs the details?

steampowered

I've never provided evidence of a deposit to the EA. The EA gets a DIP and that's it.

There shouldn't be a problem as long as you have the full deposit in time for completion.

You only need to have 10% by exchange. 10% is the standard deposit, in terms of the contract between buyer and seller. The remainder is the deposit for mortgage purposes, and will need to be paid just before completion alongside stamp duty and conveyancing fees - your solicitor will usually send you a completion statement.

FtbDreaming

Ive only got every penny required quite recently but mine is a right to buy purchase so no estate agents etc involved. For my mortgage i said id have xxxx by y date and they were ok with it. Same with the solicitor AML checks, i sent all my statements and said im adding xxx a week until i have the full deposit. 

clamdreamer

AdrianC said:

When you place your offer, the EA will require proof of proceedability - which means you're going to need to show them equity + DiP for at least enough to cover the offer amount. The precise proportions are the lender's issue, not the vendor's.

Do you have a DiP from a lender? How much?

Thanks AdrianC

I'm not sure whether to call the DiPs- but the broker sent me through some mortgage illustrations from Barclays based on a £290k purchase price (because I mistakenly told him the listed price was £299k instead of £295). With a £50k deposit they'll lend me £240k over 35 years, 2 years fixed at 1.99%

20% deposit for £290k purchase, 2 years fixed at 1.43%

Back when I first started looking a coupe of years ago I got some DiPs from Halifax which have expired- the last one said they'd lend ~£235k but my salary has improved a bit since then. 

AlwaysPondering

anerise said:

I had to provide proof of deposit to the estate agent when our offer was accepted before they would take the house off the market. And then again when doing initial paperwork with the solicitor and during my mortgage application. So best to have everything ready before you make the offer.

Same here. We sat there in the estate agents with screen shots of bank/savings accounts as they added up the amounts to make sure it covered everything. Only then would they officially take the house off the market (or put a SSTC against it), and tell the sellers that the offer (which had already been accepted) was good to go with.

Solicitor also wanted to know how we were planning over covering the legal costs, stamp duty etc as well. So just make sure you've factored that in.

martindow

Assuming that you can withdraw money easily from the savings account, could you transfer cash from your current account to bring it up to the figure you require and get a statement showing this.  Then you can transfer it back to live on for the next few weeks knowing that once your next salary appears you will be making your regular payment and the money will be in place.

Incidentally, have you accounted for the other expenses in house purchases - surveys, solicitor's fees and the like?  They will need to be paid as well of course.