Exchange - always a deposit?

[FedupofTurkey]

Just read a thread about paying a deposit at exchange. Didn't know we had to do that? Do we? Obviously we've funds for our purchase but only when our house sells. Slightly panicking!

Are you tying the sale and purchase together? The deposit from your sale is used on your purchase and is passed up the chain.

The deposit at exchange is 10% of the sale agreed price.

Yes i am, so exchanges need to be on the same day

Lost a long post!

It's fine. Your solicitors will sort it

We didn't give a deposit at all. We were changing the let to buy on our house, buying new house, so there wasn't any cash available. Solicitor told us she'd try zero deposit, if they didn't accept that then we'd offer a few grand we could cobble together, nothing like 10%. They were happy to exchange without any deposit to give some certainty. We were told if we pulled out we'd be liable for the 10% although don't know how they would have got it. Didn't find out as wasn't going to pull out. Our solicitor sorted it and was unphased.

In our chain of four, the first-time buyers at the beginning of the chain paid a 10% deposit on exchange, the second buyer had no deposit (other than equity from house sale), third buyer the same. Fourth person (end of chain) accepted the only deposit in the pot (considerably less than 10% of her sale price) and all was sorted on completion day by the solicitors when all monies were received.

they cascade the money from bottom of the chain upwards .

It's fine - lots of people are in this situation. The only circumstance it might matter is if you were in competition with another buyer who was offering a similar amount, but with a larger cash deposit. Then the vendor might decide (if they were cautious or wary) that your 'rivals' were a safer bet, because their cash deposit would be better surety and real compensation if anything went wrong, whereas they'd have to take you to court to get any compensation from you if you pulled out...

Sometimes your mortgage company advance the difference between the deposit you get on the sale of your current home and the 10% deposit on the one you are buying - as it will all be part of the mortgage anyway.

And yes, you do need to exchange on the same day for sale and purchase because otherwise you could be left homeless, or with two homes to pay for! Generally everyone in a chain exchanges and then completes all on the same day.

Wow so everyone exchanges and completes in one day

We didn't Turkey. Our buyer was in rented and was acting "volatile" as the EA described so we exchanged asap. We knew this was a risk particularly if our seller had pulled out or started messing about with dates. However, all is fine. We exchanged on the purchase last week and are moving on Thursday. Our seller is moving into temporary accommodation. Had we not exchanged on the purchase in time we would have been looking at putting the furniture in storage and renting a local holiday let! Had the seller pulled out, we would have rented for 6 months.

Our chain is only our buyers, us & our vendors, We are all exchanging asap (our sale first then our purchase probably) but completing on the same day. We are cascading deposits (10% from our buyers, that plus a tiny bit of cash from us but not 10% as we are upscaling significantly, our vendors are downsizing and have cash for whole purchase)