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Buyer only has 2% deposit

13

Comments

  • Alexland
    Alexland Posts: 9,653 Forumite
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    If a first time buyer genuinely has a 5% deposit then I don't see why he cannot provide it. An alternative approach you may wish to discuss with your solicitor is for the chain to exchange and complete on the same day which we once did and so didn't require a deposit to be passed up the chain.
  • PersianCatLady
    PersianCatLady Posts: 622 Forumite
    Alexland wrote: »
    If a first time buyer genuinely has a 5% deposit then I don't see why he cannot provide it. An alternative approach you may wish to discuss with your solicitor is for the chain to exchange and complete on the same day which we once did and so didn't require a deposit to be passed up the chain.

    It all sounds rather dodgy doesn't it?
  • eddddy
    eddddy Posts: 16,432 Forumite
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    PersianCatLady wrote: »
    It all sounds rather dodgy doesn't it?

    Dodgy in what sense? Illegal, immoral, high risk?

    TBH, the big problem with exchange and completion on the same day is the uncertainty. You can never be sure if/when it will happen.

    Most people want to book removal vans, book a day off work, maybe arrange childcare etc in advance. That's difficult if you exchange and complete on the same day.

    And if you have a flaky FTB who may or may not be able to raise the cash, it's even more uncertain.
  • PField
    PField Posts: 89 Forumite
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    People used to buy houses with 100% mortgages and no deposit. How did that use to work?
  • jimbog
    jimbog Posts: 2,113 Forumite
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    PField wrote: »
    People used to buy houses with 100% mortgages and no deposit. How did that use to work?

    This discussion relates to deposit on exchange rather than a deposit to secure a mortgage
    Gather ye rosebuds while ye may
  • eddddy
    eddddy Posts: 16,432 Forumite
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    edited 15 July 2017 at 9:58AM
    PField wrote: »
    People used to buy houses with 100% mortgages and no deposit. How did that use to work?

    That was safer because the buyer had a firm mortgage offer for 100% of the funds - so it was a pretty safe bet that 100% of the funds would be available for completion. (So maybe you'd risk accepting a smaller deposit at exchange.)

    In the OP's case...

    The buyer currently has a firm mortgage offer for 95% plus 2% in cash, and hopes to save up the remaining 3% in time for completion.

    What if the buyer can't save up that last 3% in time?

    (If that happens, the bottom line may be that the FTB couldn't complete and would face massive damages claims. So the FTB might go bankrupt, and leave the OP massively out of pocket.)
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    I think eddddy has it, this is a FTB buying at the limits of their affordability and it could easily go horribly wrong. I'd either want a same day exchange/complete, or find a new buyer, because risk to the OP is very high if the FTB screws up, which is quite likely given they don't have the basic finance in place at the time they need it when it's clear they should have it.
  • Yazmina
    Yazmina Posts: 291 Forumite
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    AnotherJoe wrote: »
    I think eddddy has it, this is a FTB buying at the limits of their affordability and it could easily go horribly wrong. I'd either want a same day exchange/complete, or find a new buyer, because risk to the OP is very high if the FTB screws up, which is quite likely given they don't have the basic finance in place at the time they need it when it's clear they should have it.

    The buyer's solicitor has said that the buyer is waiting on his monthly salary to be able to complete. He's asked for exchange on 28th July and completion on 28th August. It sounds like he doesn't understand the process and we wants to make up for the shortfall in his deposit when he gets paid at the end of August.

    My solicitor and the EA have applied pressure to the buyer's solicitor, so I should know one way or another next week. Today I'm going to tidy the flat in case I need to start viewings again 😔.
  • G_M
    G_M Posts: 51,977 Forumite
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    He's so financially stretched that he should not be buying. If it was HE on the forum seeking advice, we'd be telling him to pull out.

    So my advice to you is, pull out.
  • eddddy
    eddddy Posts: 16,432 Forumite
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    The risk to you will be much smaller if you delay exchange until he has a 5% deposit in cash saved up.

    Then the solicitor will be holding 5% and the mortgage lender will be providing the other 95% - so there is much less risk of the buyer failing to complete.


    BUT... mortgage lenders sometimes do last minute credit checks before releasing funds - and have the right to change their minds.

    So if the FTB does something daft, like raising funds through payday loans to pay the deposit, that might spook the lender into changing their mind about lending.
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