Buying and selling - is our exchange deposit not enough? In a panic!

[rosemarycait96]

We are hoping to exchange next week on our house sale and purchase, and complete in mid-October. Chain is 4 parties, we're 2nd from the top with 2 below us.

We have just had an email from our solicitor saying "you can transfer the £24k odd that we need from you as per the draft accounts provided". Um... This is first we’ve heard of ANY money being needed from us on exchange. We hadn't received the draft accounts yet and didn't know this. We don’t have enough in the way of savings (10k in the bank), we just have our house sale, equity, etc.

We're selling for 305k, buying for 395k. Obtained a mortgage with 85% LTV.

In a total panic right now - just eaten my own bodyweight in pasta while in shock from reading the amount. We simply don't have the money and weren't told that we'd need to save up more/fork up cash on exchange. We'd ask family for money, but it's a lot of cash and my SIL with mental health problems has gone missing this week, everyone is rightly tied up with that and we're all worried. I'd hate to ask for money from family at a time like this.

I thought deposits usually just worked themselves up the chain on exchange? In that case, is it that the deposit from the chain isn't enough?

We (perhaps wrongly) were thinking all of the proceeds from our house sale + buyer's deposit would be the deposit for our purchase.

I've emailed the solicitor back asking for clarification but will be calling him in the morning to discuss. Before I ask him any stupid questions, could someone please explain how this has been worked out? Is there anything we can do at this point?

[RM2013]

Thanks for updating us. We are buying our 3rd house and don’t really remember when we paid a deposit - we must have done as FTB but when we sold our last house and bought this one I don’t remember us physically paying our any money and was all taken from the equity in the house sale - this was 19 years ago though so memory might not be good!

id read about exchange deposits being 10% and panicked because we would be short using our buyers deposit to be passed up the chain (we are only a chain of 3 - FTB purchasing our house - and vendor we are buying from us moving in with family)

I specifically asked our solicitor to clarify and she confirmed that we would not need to physically pay a deposit on exchange as our buyers deposit would move up the chain.

i hope this is the case as we have a large deposit for our mortgage but this is only available on the sale of our house.

i am hoping that the fact that our vendor isn’t buying anything means that the deposit from our buyers is used in the transactions

hope your move went well

[onemouseplace]

Also to add - I hope everything went well for you in the end @rosemarycait96 and you are all settled and in your new home now.

[onemouseplace]

@onemouseplace

I'm glad you've posted this as I've just been assuming the deposit would pass up the chain and didn't realise that it needs to actually be agreed in advance - we also don't have the cash to plug the gap as our sale is paying for our purchase!

Something to confirm with my solicitor tomorrow!

I wanted to come back to this thread to say that we did end up having an issue with our exchange deposit. I asked my solicitor (twice) to confirm that the deposit would pass up the chain as normal and they never got back to me one way or another about it.

Until the week we were expecting to exchange and I got a very awkward phone call saying they expected we would be required to make up the full 10% (we were in the middle of the chain). I have strong suspicions that our seller was using this as yet another delaying tactic (we had the money but not instantly accessible) and I do wonder what would have happened if we had said that we didn't have that sort of money to hand and whether they would have backed down and accepted less that 10%.

I'm pissed off about it though as, even though it should all come out in the wash when we complete, this should not have only come to light at the last minute.

[Twiglets1]

@rosemarycait96

Looks like that's what's happening!

The good news is:

My husband, being the maths genius that I will never be, spotted that an early repayment charge of £5600 was included in our mortgage figures where it shouldn't have been - we're porting our deal across and it should never have been included in the final balance due from us.

So, with that amount minused, minus the stamp duty cut (thanks Liz), means the amount due from us is much more achievable. It'll be tight, but we don't need to borrow money and that's the most important thing.

Pray for our simultaneous exchange/completion! We're selling a help to buy house which does complicate the process so it is actually going to be super tight.

I’m praying for you.
Well I’m not religious but I’m hoping it all goes smoothly for you next week 🤞

[ADadadadaLikeThisInTheBackground]

My husband, being the maths genius that I will never be, spotted that an early repayment charge of £5600 was included in our mortgage figures where it shouldn't have been - we're porting our deal across and it should never have been included in the final balance due from us.

Oh wow! Well done him.
ALWAYS worth going through ANY invoice etc line by line and doing a sanity check - we've had similar.

We had an offset mortgage once and the bank had "added" our savings balance to the mortgage debt i.e. treated it as debit instead of credit! Massive fundamental error... luckily it was so big we spotted it, although did think we were going mad.

[Doingprettywellthanks]

@2bazookas

Really? Before taking on each conveyance, my lawyers have always quoted a full written list of their charges, plus all taxes and any land registry costs (with examples, when it's a percentage cost). No nasty surprises.

They have also, required the buyers lawyer to establish and confirm that the buyer has sufficient funds.

Same here

[2bazookas]

@ChilliBandit

@LionessesRules - in my experience the solicitor only checks the funds are in place to buy the house, the bank normally asks at the mortgage appointment whether you’ve considered the funds needed for SDLT and professional fees.

Really? Before taking on each conveyance, my lawyers have always quoted a full written list of their charges, plus all taxes and any land registry costs (with examples, when it's a percentage cost). No nasty surprises.

They have also, required the buyers lawyer to establish and confirm that the buyer has sufficient funds.

[2bazookas]

Last time my solicitor did a conveyance for us ( she has done several) she told me hackers were actively faking financial emails between lawyers and their clients.

[LolaSparkle]

Just be mindful, with the early repayment charge, some lenders charge it on settlement when porting and then refund it within 30 days of completion on your new home.

Skipton Building Society did that to us. We knew about it thankfully but just wanted to make you aware that it can work like this when porting.

[Gazelda]

@Doingprettywellthanks

In both these issues, the key is to forgive yourself and move on

and learn from the mistake for the future surely

Well, yes. Which I suspect OP has done without it having to be pointed out to her.

[Doingprettywellthanks]

In both these issues, the key is to forgive yourself and move on

and learn from the mistake for the future surely

[Gazelda]

@Doingprettywellthanks

I am not “berating” you

but this is a huge purchase and you didn’t bother to do even the most basic research re stamp duty or fees - literally a thirty second google. And to start a mumsnet thread rather than just picking up phone to clarify is baffling.

Have you never received a piece of information and panicked? Reacted without thinking logically? During a pretty stressful time (moving house, pregnancy)?

And yes, we'd all like to think we'd researched thoroughly and properly. But sometimes it doesn't work out like that. Sometimes we're a numpty, sometimes we drop the ball, sometimes we think 'someone else' has done it.

In both these issues, the key is to forgive yourself and move on. And ignore anyone who criticises and says 'I wouldn't have done that' from the comfort of their smug armchair.

[Doingprettywellthanks]

@rosemarycait96

Oh come on, everyone else here has been super helpful with advice, I don't need to be berated for not working it out correctly, everyone makes mistakes.

Thanks to those who did give good advice, we got there in the end :) Leaving this thread now though.

I am not “berating” you

but this is a huge purchase and you didn’t bother to do even the most basic research re stamp duty or fees - literally a thirty second google. And to start a mumsnet thread rather than just picking up phone to clarify is baffling.

[rosemarycait96]

Oh come on, everyone else here has been super helpful with advice, I don't need to be berated for not working it out correctly, everyone makes mistakes.

Thanks to those who did give good advice, we got there in the end :) Leaving this thread now though.

[Doingprettywellthanks]

And to start a mumsnet thread before picking up phone to your solicitor?

come on op - you’re making biggest purchase of you life!

[Doingprettywellthanks]

What is the value of the property you’re buying? Surely you could have done the very simple calculation to work out stamp duty and then added on the estimated conveyancing fee (they always put that in writing - the estimated fee)

[rosemarycait96]

@Doingprettywellthanks ha, you're not wrong there. But honestly, our mortgage advisor was the person who gave us the ballpark figure near the start so that's what we went on. Our solicitor neglected to provide us with the actual amount until yesterday.

As for the 24k itself, like I said above there's a chunk of that being removed due to the early repayment charge being added on where it shouldn't have been. For the remaining difference, I can only assume we were poorly advised and have also been massive numpties.

The remaining amount will be tight, but we can do it.

[Doingprettywellthanks]

My husband, being the maths genius that I will never be,

Not on the basis of what you’ve said in this thread! 😂

[Doingprettywellthanks]

The 24k is in fact our completion balance, after stamp duty, fees and everything had been taken into account. We had calculated that we'd need 10k, 13k at the most to complete. It's actually more like double that...

out of interest…. What are your finances like generally? Because I can’t get my head vaguely thinking that £10k, £13k most would be need, without doing an iota of research

[rosemarycait96]

@Twiglets1

That’s stressful.
Simultaneous exchange & completion on the same day is also possible but not recommended for the nerves!

Looks like that's what's happening!

The good news is:

My husband, being the maths genius that I will never be, spotted that an early repayment charge of £5600 was included in our mortgage figures where it shouldn't have been - we're porting our deal across and it should never have been included in the final balance due from us.

So, with that amount minused, minus the stamp duty cut (thanks Liz), means the amount due from us is much more achievable. It'll be tight, but we don't need to borrow money and that's the most important thing.

Pray for our simultaneous exchange/completion! We're selling a help to buy house which does complicate the process so it is actually going to be super tight.

[Twiglets1]

@rosemarycait96

UPDATE: Spoke to solicitor, and we need to declare it as a gift. They'll do that for us, which is fine.

What is not fine:

Things developed rather quickly. Our buyer has said out of the blue that their mortgage offer expires next Friday and they need to complete ASAP - it's the first anyone, including our solicitor, has heard of that. Everyone is scrambling to gets funds requested in case they can't extend their mortgage offer, and if they insist on the 30th we'll exchange and complete within 48hrs of each other next week. Yikes.

That’s stressful.
Simultaneous exchange & completion on the same day is also possible but not recommended for the nerves!

[LadyLapsang]

Just to be aware the relatives giving you the money will have to screen shot the account to show the transfer as well as complete the declaration of it being an outright gift. May be easier for the money to come from one account if you are in a hurry.

[rosemarycait96]

UPDATE: Spoke to solicitor, and we need to declare it as a gift. They'll do that for us, which is fine.

What is not fine:

Things developed rather quickly. Our buyer has said out of the blue that their mortgage offer expires next Friday and they need to complete ASAP - it's the first anyone, including our solicitor, has heard of that. Everyone is scrambling to gets funds requested in case they can't extend their mortgage offer, and if they insist on the 30th we'll exchange and complete within 48hrs of each other next week. Yikes.

[Imnotswallowingthat]

@rosemarycait96

Do you know what they ended up doing to rectify their situation?


@ChilliBandit that's what we're hoping.

I've asked my solicitor to clarifying whether it's an issue at this stage, we'll see what they say.

They sold one of their cars to temporarily raise funds to complete the purchase.

[rosemarycait96]

@Imnotswallowingthat

This happened to a friend of mine recently, they hadn't taken into account the early exit fees and interest from their existing mortgage and miscalculated by around £7k.

Do you know what they ended up doing to rectify their situation?


@ChilliBandit that's what we're hoping.

I've asked my solicitor to clarifying whether it's an issue at this stage, we'll see what they say.