First time buyer- Exchange deposit

dan_2_e

I'm a first time buyer and have saved for £10,000 for a house. 
To keep the numbers easy I have secured a 95% mortgage on a £100,000 house 


I have now been introduced to the term an exchange deposit, at the industry standard 10%. 
As my deposit is 5% I have now been told i must make the shortfall on completion as the seller is entitled to the 10%.

How does this work? if I pay the £10,000 i will have no money to buy white good and pay the solicitors, 

or do i pay £5000, and the remainder comes from the mortgage loan on the date of completion?

My confusion also extend further, if i have secured a 95% loan and i pay £10,000 exchange deposit, that would mean £105,000 would go towards the property? Is the shortfall refundable assuming i complete on the property?

Many Thanks

housebuyer143

If you only want to put on 5% tell them that and explain that you have a 95% mortgage. They will need to run it up the chain but it will probably be fine.

If not, you part with it for now and you get it back from your solicitor, the overpayment when you complete.

user1977

dan_2_e said:

As my deposit is 5% I have now been told i must make the shortfall on completion as the seller is entitled to the 10%.

Told by whom? If you mean your solicitor, they should be explaining all of this to you.

km1500

you are correct the industry standard is 10%

however it is not uncommon for the parties to agree on 5% with the proviso that the full 10% is payable should the buyer withdraw after exchange

your solicitor should request a 5% deposit agreement from the other party

propertyrental

and if you do have to pay 10% at Exchange of contracts ie £10,000, then at Completion you'll only have to pay the outstanding £90,000.

Since your bank is lending you 95% (£95,000) you will get £5,000 cashback to spend on your white goods etc.

But I have to ask - is this a wise purchase? You appear to have very limited /zero 'contingency' so will be very financially exposed.....