Confused about deposit on newbuild property, please help!

[Norfolkbumpkin]

We are in the process of selling our house and moving to a newbuild property. We paid a £500 reservation deposit on the property when we agreed the price, and assumed that the balance would be paid at the end from the proceeds of our house sale and the increased mortgage lending. We have received a letter from the developers today confirming the sale which says they require a 10% deposit on exchange. We don't have this money laying around and I am bricking it thinking that the sale now wont go through. Is this standard practice? We haven't moved in 8 years so can't remember what happened last time. Is exchange of contracts day when the money moves anyway, or is it completion day? Are there any newbuild owners out there who can help me out on this?

[fishnet]

Hi

This is completely standard I'm afraid. The point at which you exchange contracts is when the sale becomes legally binding. If you pull out after this point you would lose any deposit paid. This is why sellers require a deposit, usually 10 per cent, sometimes 5 per cent.

You have a couple of options. Firstly your solicitor can go back and say you will only put down a smaller level deposit. Secondly you could do what is called simultaneous excahnge and completion which means that it al happens on the same day, ths avoiding the need for a deposit. Talk to your solicitor about it and they will explain the process in more detail.

[ruddynorah]

yes we just exchanged and completed same time

[nailpolish]

yes that is completely normal
you pay a deposti to secure the plot you want, but if you dont pay a further deposit to secure the sale by a certain date, you lose the house

the idea is that you ahve sold your house by now,or you have the deposit sitting around

[Sorrento]

Can you get a 10% deposit from the people buying yours and exchange with them before your deadline with the builder ?
I would tell them the situation, they won't want to loose you any more than you want to loose the house.

[SexyDomesticatedDad]

Is the new build proceeding - there have been stories around where builder takes the deposit but then delays the build on the next phase due to not enough other houses being sold - then the people could not get their 10% type deposits back! maybe worth checking that out too with builder / solicitor too.

[islandofsodor]

Yes, this was standard with us for a new build too.

Our buyers gave us 10% deposit but as the house we were buying was of a higher value we had to borrow the rest from my parents until we completed.

[Norfolkbumpkin]

Thanks everyone for your replies. We have spoken to our solicitors and they advised not to worry about the deposit as the money basically comes from up the chain, and they arrange the payment from that. Phew!