Moving house - can anyone help with deposit question?

[ToniSoprano]

Does anyone know if the 10% deposit one has to pay on exchange of contracts comes out of the deposit the buyers have had to pay? Am worrying that I will have to come up with actual money, which I won't have until the house is sold! Would appreciate an answer if someone knows...

You need to have the cash deposited with your solicitor and at exchange there are simultaneous transfers up the chain. You cant get your buyer's money early to use for your deposit!

The deposit can move up the chain. We just moved house & our buyers deposit was "sent up the chain" to use as ours. We didn't have to find any money prior to completion and then everything was paid out of sale of house/mortgage.

Thank you for replying llama and tricot. Only problem is those two answers seem to be contradicting each other. My buyers will pay a deposit on the day of exchange, and are you saying tricot, that this cannot be used to pay deposit to the people I'm buying from?

We did the same as Ilama - we were using the sale of our house and a mortgage to buy a new one and didnt have to provide any money to cover a deposit at exchange or completion - it just kind of all transferred through and then all the bills were settled at end (stamp duty, estate agent, solicitor etc)

I did have a few middle of night waking in a cold sweat panics just before exchange as to whether all my calculations would pan out!

This CAB guide says

"If you are also selling a house, it is usually possible to put the deposit on the property being sold towards the deposit on the property you are buying."

so check with your solicitor how it works in practice.

www.adviceguide.org.uk/england/housing_e/housing_moving_and_improving_your_home_e/buying_a_home.htm

I've heard it passes up the chain too. Although what if you're selling a cheaper house and buying a more expensive one, like we're going to be doing? There's no way 10% of our house would come close to the 10% of the sort of price range we're looking at.. and given we've only just got out of negative equity there's no way we have savings to cover the difference right now!

You can agree to pay a lower level of deposit with your vendor - but on the agreement that the shortfall of the 10% is payable as the deposit if it fall through (or something). This is what we did - our buyers deposit did not make our 10% - but our vendors were happy to take less.

We passed ours up the chain - like Fishfingers this did mean that the people we were buying from we getting 8% rather than 10% but they were fine with this. If you have a longer chain the people selling a very valuable house at the top end of the chain might not be satisfied with a deposit that is 10% of the value of the first house in the chain, but I gather that's fairly rare.

I stand corrected.... And am also a bit shocked!

I am an ex mortgage underwriter.

I can assure you that your buyers money will be passed up the line on exchange as a deposit for your house. It is only if you are a FTB that you will be asked for the 10% upfront by your solicitor for exchange.

When we bought our current place (twice the value of the one we sold to move), our vendor decided just days before exchange that he wanted a full 10% deposit, which was double the amount we were to get from our buyer and 'pass up the chain'. The usual and generally accepted 'pass it up' way wasn't good enough (even though he was top of the chain and not even buying anywhere, so had no deposit to pay on and wasn't happy that the contracts still guaranteed he'd get his agreed sale price or walk away with our deposit at least if it all fell through).

We were left with having to rustle up quite a bit of extra cash on top of our general moving costs, fees and stamp duty to make up the other half. Best to check with your solicitor.

I have asked my solicitor this very question this morning. She said no, we didn't need to put up the money at exchange, we could just write on all the forms that our deposit would come from the proceeds of the sale.

You don't actually have to pay anything, provided your contract states that you are liable for 10% at the time of exchange. That's good enough for the seller to pursue you for that sum if for any reason you fail to complete - they don't need the money up front (although many will ask for it). As others above have advised though, you can use the deposit you are being paid and pay it "up the chain". It's standard practice to do so.

Thank you all so much for your posts! It has really helped to put my mind at rest, so really appreciate you bothering. God, the stress of waiting until it is all definite!

Hi I’m selling my house through a estate agent he has a cash buyer but said they do not have to pay us a deposit? Is this right ?
Thank you

He doesnt pay you a deposit
But he should be putting a 10% deposit with his solicitor
Which should be absolutely no problem if he is a genuine cash buyer
I would ask for proof of funds for 100% of the asking price... most cash buyers arent cash buyers at all

We had this last year. Sold old house for £162k and our new house was £185k. Our buyers deposit wsa passed up and used as our deposit although not sure if it was enough to cover say the usual 10%. No one mentioned it it was just "done"
ditto on completion all the monies were sorted. I held back some proceeds from sale to cover fees and slightly extended mortgage on new home and somehow everything was just done for us.