When to negotiate reduced exchange deposit?

ilikewatch2

Hi All,
I'm feeling a bit of an idiot to be honest...
Wife and I have been really keen to move on from our current home, and have spent the last couple of years overpaying the mortgage with every spare penny we have.
Recently put our house on the market, and accepted an offer over asking price within a few days. Almost immediately we found a property we loved, viewed, and made an offer on - still waiting to hear back from our vendor re: our offer.
Anyway, I've never been involved in a chain before and somehow the importance of the exchange deposit had passed me by.
Today I had a nagging doubt in the back of my mind and started to do some more research - it became apparent that we would need to find an exchange deposit (which we don't have in cash, because it's tied up in the equity in our current property), I could probably realise a reasonable proportion of the expected 10% exchange deposit (maybe 7%?) by selling some assets, but not the full 10% and not for for 2-3 weeks.
So, I guess my real questions are:

• What's the etiquette around timing when to negotiate a lower exchange deposit? - should I have made the vendor aware that I wouldn't have the full 10% when I made my initial offer? Wait till they've accepted our offer then ask our solicitor to negotiate?
• Is it acceptable to borrow the exchange deposit from family? Would our mortgage lender need to know (we have sufficient equity to cover our mortgage deposit)?

Rough figures:
We've accepted a £100K offer on our house with £50K equity
Have offered £300K on the new house, AIP in place for a 90% LTV mortgage, with the excess used to pay legal/moving costs and some improvements to the new house.

user1977

Does this thread help solve your problem?
https://forums.moneysavingexpert.com/discussion/6265181/10-deposit-at-exchange-of-contracts#latest

ilikewatch2

user1977 said:

Does this thread help solve your problem?
https://forums.moneysavingexpert.com/discussion/6265181/10-deposit-at-exchange-of-contracts#latest

Not really, because in that example the deposit received from the buyer more than covers what is due to the vendor. In my case if I receive a 10% deposit from my buyer this would only cover a third of what I'm due to pay to my vendor.

But thanks for the help!

julicorn

^Although in this specific instance, OP will only get a £10k deposit from their buyers, so it's really up to the vendor whether they'll accept a lower deposit than 10%, or whether they'll want it to be topped up. 

[Deleted User]

Most solicitors paperwork I have seen asks this on the initial paperwork.  Last time I moved and was buying for more I didnt have to pay extra.  It didnt even come up in conversation. Was just sorted behind the scenes.   Just done a whole load of shared ownership deals where they exchanged on 0% deposit.   

If the paperwork doesnt ask just raise it with your solicitor early doors and let them sort it out. 

Thrugelmir

A discussion to be had with your solicitor. As all depends on what your vendors will accept. The exchange deposit being written into the draft contract. 

ele_91

I don't think you need to negotiate, the solicitors should agree that the bottom of chain deposit gets passed up. Very common scenario for most people to have the majority of their equity tied up in their house, with the % covered getting less as house values increase up the chain. The amount on exchange doesn’t have to be 10%, although you are still liable to pay this if you fail to complete. 

Thrugelmir

ele_91 said:

I don't think you need to negotiate, the solicitors should agree that the bottom of chain deposit gets passed up.

Solicitors don't agree on what their clients will or won't accept. 

bex2012

I asked my solicitor the exact same question, and he said in 20 years of conveyancing hes only known an increased deposit a handful of times. Usually the initial deposit at the bottom of the chain just moves up, so the % reduces as the houses get more expensive. The only time there would likely be an increase needed is if there is a huge price difference between the bottom and top of the chain.

ilikewatch2

Thanks for everyone's input - I don't feel quite such a git now - hopefully be able to negotiate something with our vendor (if they ever accept our offer!)