Deposit Timing in Sale/Purchase Chain

Chubba

Hello

I am a first time seller and will be upsizing. How does the deposit funding work from a sale and subsequent purchase?

I know at point of contract exchange a deposit of 10% of the agreed price will need to be paid. Presumably my solicitor will try and time the exchange of my house sale to coincide with the buying of my new house so that the deposit received on my house sale will be used to fund the deposit of the new one?

But if my house sold for £200k and I’m buying a house for £300k, do I need to have cash ready to fund the shortfall of the difference between the two deposits?

Thanks

anselld

Sometimes a smaller % deposit can be negotiated as you move up the chain.  However, you should plan to have the £10k deposit top-up available to be sure.

Sapindus

I dunno, but my solicitor just wrote to me and said "if the deposit from your sale is less than the 10% deposit needed for your purchase, I will have already asked you to send me the balance in readiness for exchange".  Well I'm not selling anything, so I sent her the full 10% in a hurry saying I was sorry I hadn't spotted the earlier request, and got a rather cool reply back saying "we don't usually ask for the deposit until a date has been agreed".

Chubba

Hi

I thought I’d update this post in case anyone else has a similar question…

I’m now at the stage where I’ve accepted an offer to sell my house and had my offer to buy another house accepted. 

My solicitor has explained to me (and of course this is specific to me so may not always be the case with other solicitors’ working practices) that I would not need to separately fund any shortfall between the 10% I am receiving for my house and the 10% I need to pay for the house I am buying. This is because apparently no monies are physically transferred and my solicitor just communicates up the chain that £x amount is coming from the sale so it’s a payment on account and it keeps going up through the chain like that.

I guess if the chain falls through then I may need to cover the shortfall but it’s reassuring that I don’t need to find the shortfall as it stands if everything goes well.