When to pay deposit?

LunaAndBelle

I’m a FTB and getting a little confused on what happens now. The solicitor isn’t as helpful as keeps avoiding the question!

All of the searches have taken place and we’ve agreed a completion day of 17th July. I’m paying a deposit of £55k (Across a LISA and an easy access ISA) on a purchase price of £177k. 

I’ve been asked to sign the contract, in readiness for completion, but the completion date is left blank until the actual date and I’ll receive the final version then. I think this is standard but I didn’t like the idea of signing something not complete. However, I don’t wish to hold up anything. 

I’ve read that 10% is needed to be done on contracts - so does that mean I need to pay that now? It works out well because I am paying £36k from my LISA and the remaining £19k is from my ISA. So do I need to pay the £19k now (which covers the 10% and a little more) and then the solicitor just needs to draw on the LISA to get the rest for the mortgage?

Thanks for any help!

EssexHebridean

You will need to transfer the deposit amount to your solicitor usually at the latest the day before exchange of contracts. That will just be the 10% though - your "cash contribution" to the purchase price will need to be with your solicitor at the latest the day before completion. 

it might be worth just reminding your solicitor that, as a FTB, you're very unsure of the procedure, and perhaps they could just confirm what will be needed when to you. Sometimes they forget that just because everything is second nature to them, not everyone has done it before, or recently! 

LunaAndBelle

EssexHebridean said:

You will need to transfer the deposit amount to your solicitor usually at the latest the day before exchange of contracts. That will just be the 10% though - your "cash contribution" to the purchase price will need to be with your solicitor at the latest the day before completion. 

it might be worth just reminding your solicitor that, as a FTB, you're very unsure of the procedure, and perhaps they could just confirm what will be needed when to you. Sometimes they forget that just because everything is second nature to them, not everyone has done it before, or recently! 

Thank you for this! 

Yes, I’ve just requested further confirmation now. He’s normally very good but hasn’t been so helpful at this stage. 

propertyrental

'Deposit'has (confusingly) two meamings

1) As EssexH says, the cash contribution you are making towards the purchase ie the purchase price less any mortgage you are getting

2) the amount paid in advance at Exchange of Contracts, (with the balance paid on Completion) - usually 10%

Are you planning to Exchange Contracts in advance (1 week? 2? More?), or to Exchange and Complete on the same day.

The reason fornot dating the contract is that until Exchange of Contracts takes plce it is impossible to be sure of the Completion date, so your solicitor will date the contract at the point of Exchange - that's when when the contract becomes legally binding.

As for timing, your solicitor will need the 10% deposit (2 above) in their account before they can Exchange. To be safe, aim to get it there a few days in advance.

They will need the balance ie your cash contribution  (1 above) - the 10% already paid in advance of Completion.

Of course, if you are Exchanging /Completing on the same day, ignore the 10% deposit and just pay the full cash contribution in advance.by a dew days.