Do cash buyers need a deposit at exchange when moving home?

[Sandyhands]

Hi, I have just accepted an offer on my house and have had an offer accepted for one I want to buy. Early days. I’m just wondering, will I be expected to pay a deposit on exchange of contracts? I’m going to be a cash buyer from the proceeds of my sale and I don’t have enough money in the bank to pay a 10% deposit. How does it normally work?
I know it’s a question for the solicitor but it’s the weekend and I’m going to be thinking about it all weekend! Thanks in advance 🙏

No, we did the same. Everybody says you are a cash buyer, but you aren’t really as it’s not cash you have. You are buying from equity and that can be used for deposit.

You are not a cash buyer, you are in a chain.

We accepted a 5% deposit from our buyers on exchange, is that do able?

Thanks for the info. Yes, 5% would be doable if need be.

Normally the deposit from your sale will be used for your purchase. You may be asked to top it up if you are buying for a lot more.

Watchingthechaseagain, did it work like the final completion payment? Did the deposit move along the chain?

Thanks Pilates

How do you reply to individual comments on here? I’ve never worked it out!

I am wondering this too.. surely most people don’t have an extra 10% sitting about?

last time we moved they accepted 5% from us. But I’m assuming a lot of people don’t have that either. And this house move the house is a lot more expensive..

Press the three dots on the top right of the comment, then click quote

She’s not cash that’s why. Cash buyers DO have it sitting in the bank.

‘Quote’

Yes true. But what about the rest of us?

Yes.

Your deposit comes from your buyer and moves up the chain.

And EAs etc do refer to you as a cash buyer if not needing a mortgage, just that the cash is the equity from your current house.

I. House buying terms within the industry (in my experience if having bought and sold 5 properties so far) you are a cash buyer but not chain free.

I don’t think you are a cash buyer in this case. I had to provide proof of funds (bank statement that showed the cash in my accounts) before it even went to completion.

The money that is received from your buyer on exchange is used on your purchase. However if you’re buying something more expensive than you are selling then your solicitor will need to negotiate this with the solicitor for the other side. It’s all quite standard, no need to worry.

You click on Quote' instead of reply,

Thanks 😂

Sounds like from the responses above that it will come down the chain from your buyer.

You are not a cash buyer OP. You are in a chain and reliant on the sale of your house to proceed. A cash buyer has the money in the bank already and doesn’t need to complete a sale to proceed.

In terms of deposit, this is paid by the first people in the chain (often first time buyers) and it then gets passed up the chain. Generally the value of houses increases as you go further up the chain, so the percentage of this deposit decreases.

For example if the first people pay a deposit of £10k on a £100k house then this is a 10% deposit. This £10k then gets passed up the chain. If the next house costs £125k then the £10k becomes an 8% deposit. And so on as the £10k moves up the chain.

So long as the buyers and solicitors are happy with the deposit being offered then this continues. At some stage, for example if the £10k only became a 5% deposit on the value of the house, the you may be asked to top the deposit up to a higher percentage.

Speak to your solicitor to check OP. However as the second in the chain it’s likely you won’t need to top it up.

No, it doesn’t work like this.

Yes. We didn’t pay a penny towards deposit.

Please explain how it does then.

I agree with most - the deposit moves up the chain, getting smaller each time the house gets more expensive - sone people might put more cash in, but not many.

However, if the sale falls apart post exchange you are on the hook for the full 10%

That is exactly how it works with housebuying deposits.

That would make sense. Otherwise I’m gonna need 20k in cash as the deposit we are getting is going to be much smaller than the one we would need for 10%. Which we could just do but I could imagine not everyone can!