Confused About Deposit

Conan1Sett

When I began my mortgage application I declared that I had a 15% deposit. The property I'm buying is £60k. So yes I had £9k as a deposit.

My conveyancer is asking for a 10% deposit for the exchange. The loan amount from my lender is £51k. So that £51k plus £6k will come to £57k. I don't understand how that is going to work. How does the seller get his £3k shortfall? 

user1977

Conan1Sett said:

How does the seller get his £3k shortfall? 

By you giving it to your solicitor before completion.

Flugelhorn

your solicitor will ask for 10% at some point before exchange  and then before completion they will send you another invoice including the 3K, their fees, search fees etc etc - you pay this to them before completion

Toots0293

I’m going to hop on here as I have a query regarding my deposit (hope you don’t mind)! I am putting down a 5% deposit, with a 95% mortgage. I keep seeing people state that 10% is usually paid at exchange, but what happens when you only have a 5% deposit? I’m assuming I would just put that down, but now I’m questioning that! 

AdrianC

Ah, yet again the joy of the double-meaning of "deposit"...

If you only have 5% equity, then you either need the lender to advance the other 5%, exchange and complete on the same day, or persuade the vendor to accept just 5% on exchange.

Gavin83

Conan1Sett said:

When I began my mortgage application I declared that I had a 15% deposit. The property I'm buying is £60k. So yes I had £9k as a deposit.

My conveyancer is asking for a 10% deposit for the exchange. The loan amount from my lender is £51k. So that £51k plus £6k will come to £57k. I don't understand how that is going to work. How does the seller get his £3k shortfall? 

Am I missing something? You’ve got £9k. You pay your solicitor the £6k deposit at exchange for them to forward onto the vendors solicitor and then you send across the other £3k and the lender will send the other £51k as well. That’s the £60k of the property value.

The exchange deposit and the mortgage deposit (not really a deposit at all!) are two separate entities but the exchange deposit will still come out of what you’re paying out of your own funds.

saajan_12

Conan1Sett said:

When I began my mortgage application I declared that I had a 15% deposit. The property I'm buying is £60k. So yes I had £9k as a deposit. - that's 15% equity or 'mortgage deposit'

My conveyancer is asking for a 10% deposit for the exchange. - that's 10% exchange deposit
The loan amount from my lender is £51k. So that £51k plus £6k will come to £57k. I don't understand how that is going to work. How does the seller get his £3k shortfall? - at completion, from you

1. At exchange, you transfer the 10% to guarantee you'll perform the contract
2. At completion, you pay the 5% balance to make up your 15% equity
3. At completion, the lender transfers the 85% mortgage amount
--- Total 100%

Soot2006

when we bought our first house, we didn't really have a clue as we both grew up in other countries with different systems. We gave all our available deposit (equity) to the solicitor, and he sorted out what went where and when. 10% to the seller at exchange, the rest at completion, but we didn't retransfer anything just to keep it simple in our simple minds!

t2havock

Toots0293 said:

I’m going to hop on here as I have a query regarding my deposit (hope you don’t mind)! I am putting down a 5% deposit, with a 95% mortgage. I keep seeing people state that 10% is usually paid at exchange, but what happens when you only have a 5% deposit? I’m assuming I would just put that down, but now I’m questioning that! 

The twice I've done this our solicitor asked as part of the enquires whether the vendors would be happy with a 5% deposit at exchange. I would very much doubt any vendor would make bones about this (except if the whole process has been particular contentious) as the sellers are usually just as anxious for the sale to go through as the buyer. 

Sstephenn

Hi there, don’t know where to post this so thought this might be a good place, if not tell me where to post it and I’ll comment there. 

I’m 18 years old, looking to get into real estate investing. Would a lifetime ISA be a good thing to open? Can save up to 4 grand a year plus the 25% state bonus, this would give me 5 grand to use as a deposit on a flat to rent out. Is this aloud? Are you aloud to use a LISA for this reason? I am obviously a first time buyer aswell. Thanks in advance, really appreciate it

grumiofoundation

Sstephenn said:

Hi there, don’t know where to post this so thought this might be a good place, if not tell me where to post it and I’ll comment there. 

I’m 18 years old, looking to get into real estate investing. Would a lifetime ISA be a good thing to open? Can save up to 4 grand a year plus the 25% state bonus, this would give me 5 grand to use as a deposit on a flat to rent out. Is this aloud? Are you aloud to use a LISA for this reason? I am obviously a first time buyer aswell. Thanks in advance, really appreciate it

It is better to start your own thread either on this board or consider on the savings and investments board (there are other, many would say better/easier investments than property...).

But the answer is no to your question anyway you can't use the lifetime ISA to buy a property to rent out. 
You will also sacrifice your first time buyer stamp duty relief if the first property you buy is a BTL.
If you want to buy somewhere for you to live then LISA is a very good product.