Deposits

[AreYouTheBozBoz]

This is the first time I've sold and bought and I'm confused!

I have savings but only enough to cover solicitors, removals, stamp duty, other fees. The property I'm buying is £300k so does that mean I should have 30k for when we exchange?...I don't!

I'm sorry if this is a really basic question but I just don't understand. I googled and it says it comes from my buyers deposit. But as my property has sold for 180K, their deposit is likely to be 18k...where does the other 12k come from?

I would speak to your solicitor/conveyancer about it ASAP as can confirm the amount due (or if a lower percentage would be acceptable). Most of the items that you mentioned are not payable until after the sale goes through so you may be able to use some savings there.

I THINK that typically the mortgage is released to you on the day of exchange and you then transfer over, and this is why you have to insure property from day of exchange. but check with solicitor asap

Hi we sold and brought with similar prices last year. If I recall, the 15k deposit from our buyers went up the chain and the rest was theoretical. Everyone was happy that the sum was significant enough that no one would pull out, and that if anyone pulled out after exchange they would be liable for the other 15k (or however much it would be to take them up to 10%).
I'd speak to your solicitor just to confirm that though.

We exchanged and completed on the same day and the deposit from our house purchase came from the sale of our current house.

I'm not sure how it works if you want to exchange and complete on different days.

mistletoe that's definitely wrong - you drawdown the mortgage on completion. Insurance from exchange is because you are contractually obliged to complete from the point of exchange so it's in your interest to have insurance if something goes wrong in the interim.

OP as a pp said, usually where there is a chain people will accept a lesser deposit as long as the bottom link pays 10% (assuming that people further up will be buying more expensive properties as in your case). However it is a point for negotiation so you should flag it with your solicitor asap that you will only have a 6% deposit so they can agree it with your sellers.

Thanks for the replies. I didn't even think about exchange and completing on the same day - that would make a lot of sense!.

It's just such an anxious time and it's made even more so with all the unknowns and solicitors' reluctance to give any inklings of time scales.

I will definitely contact them tomorrow to clarify what is happening. Cannot believe this has only just crossed my mind!

Don't exchange and complete same day - it isn't necessary and should be avoided.

Your solicitor will probably advise you don't exchange and complete the same day.

There are two deposits, one to the vendor securing the property at exchange, and the other is the total deposit on the property agreed with the bank for your mortgage. There can be a big difference between the two sums.

The good news is that your deposit at exchange is theoretical until completion unless you have a really difficult vendor who insists on it, for example with a new build!

How much equity do you have in the property you are selling? Therein hides all your deposits. On completion day everything moves around for real. Before then it's more a case of pledging to forfeit x amount to your vendor if you pull out of the sale.

You can even pay for some of the other stuff from the money released from your sale, such as stamp duty, legal fees etc.
Your solicitor will sort it all out magically without you even knowing.

Thanks for the info coughing. Out of interest why is it not advisable to exchange and complete on the same day?

We will have just over 100k equity when we sell. We are keeping some back to update the new property and are putting down a 75k deposit for the mortgage. We then have around 11k savings for the fees.

This is very common where there is a chain and you sellers will almost certainly accept a lower deposit on exchange. As long as you will have enough to make up the balance on completion it'll be fine. Just run it by your solicitor if you have any concerns.

In theory you should be providing £30k.

ie. £18k from your buyer and £12k from you.

However in reality the solicitors usually check up and down the chain whether people will accept the lower deposit (ie the £18k).

However if the sale did not proceed after exchange you would still be liable for the extra £12K (to make the deposit the full 10%)

But please let you solicitor know asap that you want to just use the deposit you are receiving and not topping up.

Most removal firms will not commit until you have exchanged, so if you exchange and complete on the same day then you might be without transport for your belongings.