Exchange deposits question

NI_Sense

Hi.

I need clarification on exchange deposits (not mortgage deposits) and how they work in a chain.

Im selling my house to buy another. My house has sale agreed for £125K. The house Im buying is 95K. I already posted a long winded version of this question. So apologies - still not clear so posting again. Basically at the exchange of contracts stage, does the 10% exchange deposit required, pass from my buyer to me thru to my vendor without me reaching into my own savings to pay the vendor? I am relying on my homes equity alone and require a mortgage as does my buyer.

Thanks in advance.

Tiglet2

Yes, your buyer's deposit will be "passed" up the chain so no need for you to reach into your own savings.  The buyer's deposit is likely to be held "to order" by the buyer's solicitor, so won't actually leave their account until completion.  You may need to pay your solicitors fees and disbursements before completion though.

NI_Sense

Tiglet2 said:

Yes, your buyer's deposit will be "passed" up the chain so no need for you to reach into your own savings.  The buyer's deposit is likely to be held "to order" by the buyer's solicitor, so won't actually leave their account until completion.  You may need to pay your solicitors fees and disbursements before completion though.

Thanks. So to be absolutely clear - the 10% exchange deposit is 'passed' up the chain to me, and as long as I am paying less for my next house, I dont have to use my own savings at all?

greatcrested

As the house you are buying is cheaper than the one you are selling, the 10% deposit your solicitor will receive is larger than the 10% he needs to pay your seller.

He will hold onto the excess in his client account pending Completion, whereupon he will either use it to contribute to the balance (90%) required for your purchase, or pay it to you (eg if your mortgage covers the balance required).

NI_Sense

greatcrested said:

As the house you are buying is cheaper than the one you are selling, the 10% deposit your solicitor will receive is larger than the 10% he needs to pay your seller.

He will hold onto the excess in his client account pending Completion, whereupon he will either use it to contribute to the balance (90%) required for your purchase, or pay it to you (eg if your mortgage covers the balance required).

Thanks. So what happens if my vendor ends up in this chain also buying a house, and that house is greater than the 95K I will pay for theirs - say 100K? Does that mean that my 10% exchange deposit of 9.5K is not enough for them to move on? If so, who ponies up the extra cash needed, them or me?

Slithery

Officially they do.

But what usually happens is the solicitors agree on a <10% deposit being acceptable so they don't have to come up with the additional funds.

NI_Sense

Slithery said:

Officially they do.

But what usually happens is the solicitors agree on a <10% deposit being acceptable so they don't have to come up with the additional funds.

Thanks. I guess I need to find out what really is my vendors situation. He says he has a house but is it one he needs an exchange deposit for.

saajan_12

NI_Sense said:

Slithery said:

Officially they do.

But what usually happens is the solicitors agree on a <10% deposit being acceptable so they don't have to come up with the additional funds.

Thanks. I guess I need to find out what really is my vendors situation. He says he has a house but is it one he needs an exchange deposit for.

You can do, but your vendor and their solicitor would just sort it. Exchange deposits are rarely an issue if the chain isn't too long and the values of the top house and bottom house aren't too different.