Exchanging Contracts 10% deposit help

honeybee3939

Hi

We are exchanging contracts next week and have read on the internet that you have to pay 10% deposit. We are number 3 in a chain of 3 and have alot of equity in our home. Im a little confused as this is the first time we have moved house. Can anyone please advice on where this 10% comes from or do i have to search hard to get a large amount of cash !!! :eek:

many thanks in advance.

baileysbattlebus

We have bought and sold several times and apart from the first house we have never been asked for a deposit, although it was as you describe, you were supposed to have a 10% deposit. Infact we wouldn't have had the money and would have had to borrow it from somewhere.

The last time was quite a few years ago, things may have changed, but I doubt it.

I'm sure a more recent buyer will let you know - failing that ring your solicitor and ask.

posh*spice

Hey,

The deposit comes from your equity. Get your solicitor to talk you through it.:D

PasturesNew

It's OK, you won't have to cough up the money. It'll all just happen by magic through your solicitor. Ask them to explain it.

themaccas

Hi we had this last month, we just agreed verbally to pay the deposit if things fell through after exchange, all the people in the chain did so. It's usually the deposit of the people at the fist link in the chain that actually pay any money, it then gets filtered through to the top!

sealady

I wish that had happened to us! We were three days away from completition which was going to happen at the same time as exchange and we had to pull out of the agreement because our bank required a 10% deposit and only have 5% deposit. simply because the house was ex- council (about 10 years ago) I wish someone had bother to tell us to begin with!

honeybee3939

Thankyou all so much for your replies, i can stop worrying now:j !

xx

Richard_Webster

The deposit comes from your equity. Get your solicitor to talk you through it.:D

No it doesn't! That's the whole point. Solicitors talk of the deposit as the amount put down at exchange, not the difference between the purchase price and the mortgage.

It's usually the deposit of the people at the fist link in the chain that actually pay any money, it then gets filtered through to the top!

That's more like what happens, but people do sometimes have to add a bit in. E.g FTB buying for £100K has £5 deposit but at the top of the chain sale price is £400K. The sellers would be expecting £40K but would probably be told by their solicitors to accept £20K. In practice the amount would be negotiated and those in the middle might all have to add in a few thousand each to bring the total up to may be £10K-£15K which might then be accepted.

silvercar

sealady wrote: »

I wish that had happened to us! We were three days away from completition which was going to happen at the same time as exchange and we had to pull out of the agreement because our bank required a 10% deposit and only have 5% deposit. simply because the house was ex- council (about 10 years ago) I wish someone had bother to tell us to begin with!

Yours is a different situation. By your post, it seemed your lender required you to have a 10% deposit ie they would only lend you 90% of the purchase price. This has nothing to do with the amount paid on exchange of contracts.