Can someone please explain the deposit situation when buying and selling?

[Tartanblanket321]

Is it normal to pay 10% of the purchase price AT EXCHANGE when buying a property and selling one simultaneously? Surely the deposit for the new house may be much larger than the one you are selling if you are upsizing?

Is it common for sellers to accept e.g 5% if the house being sold is a lot cheaper?

What happens if the majority of your deposit on the new property is coming from the proceeds of sale? And what happens if it’s a mix of savings and proceeds - will they expect you to pay as much cash as possible at exchange and the remainder comes on completion of the sale?

I will be grateful for any basic explanations! Am in a slight cold sweat

Ten percent is standard. It would be very unusual to pay more than that.

If you can’t afford that, then offer 5 percent but be prepared they may refuse to agree that.

The deposit is paid on the day you exchange contracts - ie the point that you become contractually obliged to buy the propertyx

@8by8 - thanks but I’m still confused - the majority of our deposit is coming from selling the house and the mortgage company knows this so how can you be expected to have a wad of cash that big just sitting around?

If someone’s buying a £500k house do they really have £50k in cash ready to go as well as stamp duty? All along I’ve been under the impression from friends etc that it’s expected that your funds/deposit will be somewhat tied up in the sale?

I suppose it depends how much your buyer’s deposit is? As that goes up the chain, I’ve always been told?

You ask for the deposit to be passed up the chain ie the person at the bottom of the chain (who is purchasing but not selling)'s deposit is "passed up" acting as a deposit for all parties.
You have to ask your solicitor to agree this with your vendors but it's pretty standard so shouldn't be an issue.
If you were to scupper the deal between exchange and completion you would still be liable for whatever your contractual agreement says (usually 10%).
You don't, as both a vendor and a buyer, have to magic up a 10% deposit (provided you complete).

You don't need to transfer them £50K or whatever, the solicitor deals with the money and the deposit usually comes from the proceeds of the sale if you're selling a property too. You only need to hand over any money thats unrelated your sale.

We sold and bought recently. Our buyer was a first timer so their deposit came first, then when our sale completed their bank released funds to the solicitor - of which Xamount was our deposit. This plus the funds from our new lender went to the next perspn ups solicitor to complete the chain.

The solicitor knows you have the deposit as they ask for proofs and can see sale price, amount you owe to your old house lender and then the mortgage offer from the new provider.

As paws says.

Thanks everyone this has reassured me!!

How likely is it that a vendor says ‘no, I must have 10% right now!’ - has anyone ever had that?

Massively unlikely, that's not really how it works, you'll be fine!

@Tartanblanket321

We've just brought our house and I read and saw that we were supposed to have a deposit too, and like you our deposit was tied up in our house sale. I queried it with solicitor and they said it was fine and the deposit had to come from the first time buyer at the bottom of the chain as he was effectively paying it in 'cash'. The rest of us were using sale proceeds to fund the deposit. When we completed the money moved up the chain and as we were the end of the chain we were last ones to get our money 😁