Deposits, mortgage and exchange

LitBill

Hi,

Any conveyancing experts on here that could offer some guidance?

We have accepted an offer on our house and have had an offer accepted for a place we are upsizing too.

The property we are moving to is £75k more than what we’re selling our place for. Based on what our mortgage advisor has said, we can easily cover this cost with an 85% LTV mortgage (we may even be able to improve on this but wanted to keep some of our equity money back for improvements).

Now where I’m getting confused is in the deposit for exchange of contracts and mortgage deposit. All of the 15% we planned is tied up on equity in the house we’re selling. Our savings will cover solicitor fees but not a lot more.

So where does this leave us in terms of paying this deposit to the sellers? I’ve read that the deposit from the buyers at the bottom of the chain (our buyers) gets passed up the chain but this won’t cover the deposit we would need in exchange if it’s the same for all parties.

I’d rather not sell and then be forced to rent, I don’t know how long it would take for the equity in our house would be made available.

All very confusing, any guidance would be appreciated.


many thanks

SameOldRoundabout

The deposit will be passed up, vendors just take less than 10% on the understand of getting the rest at completion. We were in the same situation, had a 10% deposit off our buyers but that only translated to about 6% on our purchase, we weren’t even asked out it so I assume it’s very common!

LitBill

SameOldRoundabout said:

The deposit will be passed up, vendors just take less than 10% on the understand of getting the rest at completion. We were in the same situation, had a 10% deposit off our buyers but that only translated to about 6% on our purchase, we weren’t even asked out it so I assume it’s very common!

It makes me feel better that you’ve gone through this experience. I’d found it strange that both the mortgage broker and solicitor haven’t brought up any potential issues so I guess it’s all ok. It’s not until I’ve started reading things online that it’s put me in a bit of a panic.

I just want to avoid any hidden surprises later down the line.

eddddy

As above, your buyer's deposit can move up the chain - so you (or your solicitor) can ask your seller to accept a deposit of less than 10%.

It's worth bearing in mind that your seller could refuse to accept a smaller deposit, so it might be worth making your solicitor aware - so that nobody is taken by surprise and exchange delayed.

Having said that, a lot of people are exchanging/completing on the same day at the moment - due to COVID. If you're planning to do that, there's no deposit paid in advance, so this problem doesn't exist.

greatcrested

Read

https://forums.moneysavingexpert.com/discussion/6169945/deposit-of-exchange/p1

LitBill

greatcrested said:

Read

https://forums.moneysavingexpert.com/discussion/6169945/deposit-of-exchange/p1

Thank you. This thread is as conclusive as everything else I’ve read!

Drawingaline

I emailed our solicitor within a day of instruction to say that the 120k we are supplying in addition to the mortgage is all tied up in our equity and would our buyers deposit feed up to our seller (short chain, our buyer is an investor, and we are buying a property which is end of chain). She said it shouldn't be an issue and it's always a good idea to let sellers solicitors know early on. But, yes I don't have 41k just sitting around as cash, it's all in the house.