Paying remaining house deposit after exchange but before completion

london21

codingtutor said:

Hi all
Hi
I'm in a situation where I have a 5% deposit but the bank's surveyors have downvalued the house. So I have to put in an extra 15,000 for me to meet the vendor's asking price.

As suggested by many on this forum, I'm now checking with another lender to see if they can value it differently. 

As a fallback, I want to consider if I can pay part of the deposit on exchange of contracts, and then the remaining either on or just before the completion date? 

The estate agent and solicitors have indicated that these days it is taking up to 3 months to complete a sale. If that is the case then it would give me 3 months to save the extra deposit that I now need. It will be a tough 3 months. 

Has anyone been able to do this before? 

Thank you

Why not try to use the valuation to negotiate price with vendor? 

codingtutor

Hi @grumiofoundation that is a good point. I know for sure I can put down up to 8% at exchange if the exchange happens to be within the next 30 days but 10% would be very difficult. If the exchange happens to be at the end of august then I don't have a problem.

As a first time buyer I just don't fully understand the timescales here and how to go about negotiating. My solicitors have said, "however we will not get involved with any price negotiations , do you not have any selling agents ?".


I want to avoid another mortgage application because the estate agent's broker is charging a £700 fee on the application and I was told the application will take around 3 weeks and there is still no guarantee of a good valuation. I was happy with the mortgage deal by my bank because other lenders had stricter requirements and higher deposit amounts for me because I've been working abroad for the past 3 years and they required a minimum of 2 years of UK address. 

I know there are a lot of free brokers or I could apply direct and this is something I will consider but I just want a backup plan in place in case it does not work out for me. 

Thanks again

codingtutor

@london21

I did, but the seller refused to budge. I then put in another offer where we could meet halfway but they still refused and asked the agent to put the house back on market.  

grumiofoundation

codingtutor said:

Hi @grumiofoundation that is a good point. I know for sure I can put down up to 8% at exchange if the exchange happens to be within the next 30 days but 10% would be very difficult. If the exchange happens to be at the end of august then I don't have a problem.

As a first time buyer I just don't fully understand the timescales here and how to go about negotiating. My solicitors have said, "however we will not get involved with any price negotiations , do you not have any selling agents ?".


I want to avoid another mortgage application because the estate agent's broker is charging a £700 fee on the application and I was told the application will take around 3 weeks and there is still no guarantee of a good valuation. I was happy with the mortgage deal by my bank because other lenders had stricter requirements and higher deposit amounts for me because I've been working abroad for the past 3 years and they required a minimum of 2 years of UK address. 

I know there are a lot of free brokers or I could apply direct and this is something I will consider but I just want a backup plan in place in case it does not work out for me. 

Thanks again

You won't be exchanging until searches etc completed and you are ready to buy. I would not be exchanging before I had all the cash needed to know I could complete.

You can exchange and complete on the same day.

To be honest if I was the vendor and you came to me and said I will only have 8% at exchange but will have the rest by completion alarm bells would start ringing. So you may want to keep quiet about that.

If you do apply again don't use the estate agents broker. Find a broker that doesn't charge on application.

steampowered

Why do you want to exchange now if you are not ready to complete until October?

If you haven't had searches done, enquiries completed, full mortgage offer received, contract signed etc. you are not yet ready to exchange anyway.

peterhjohnson

Typically, it takes several months to get from offer to exchange
Exchange to completion time is typically a week or two (Although during the pandemic it's often same day)
So, if you only have 5% available as a deposit today but will have a further 5% available in a couple of months, you should be OK because you will have the 10% by exchange

codingtutor

Hi @steampowered

It's not that I want to exchange right now, I just wanted to know if it's reasonable to ask to complete the sale minimum of 3 months from now to give me more time to gather the remaining deposit. This is just in case the searches and enquires are done particularly quick. 

I'm a FTB and I don't have a complete understanding of the entire process and timelines at the moment. 

Thanks

codingtutor

peterhjohnson said:

Typically, it takes several months to get from offer to exchange
Exchange to completion time is typically a week or two (Although during the pandemic it's often same day)
So, if you only have 5% available as a deposit today but will have a further 5% available in a couple of months, you should be OK because you will have the 10% by exchange

Thank you. I have just had an email back from my solicitor which mirrors what you have said.  I'm feeling positive about this, thank you.