When you buy a property you will need to pay a sum of money to secure the purchase on exchange of contracts. The deposit is held by either the buyer or seller’s solicitors on behalf of everyone involved.

When Do I Need My Deposit By?

You will need to work out what deposit you have available when you make an offer on the property you want to buy. You then need to make sure you have sufficient money set aside to pay the balance of the home purchase price, legal fees, stamp duty and any other third party costs, i.e. searches, land registration fees. etc. Your solicitor will ask you to lodge the deposit with them, once you are happy to exchange contracts.

How Much Deposit Do I Need?

Usually you will need to pay a deposit equal to 10% of the purchase price. Some seller’s will accept a smaller deposit i.e. 5% when you are:

1. A first time buyer and are getting a 95% mortgage;
2. Selling a property for less than you are buying;
3. Selling to someone who does not have a full 10% deposit available.

We recommend insisting on a full 10% as there are some risks associated with accepting a smaller sum of money. If after exchange, you cannot proceed to completion (for example if your circumstances change or mortgage is withdrawn), you will still have to pay the full 10%. It is very rare that a transaction will not proceed once you have exchanged. Usually this is only where someone dies or loses their capacity, where the property is destroyed or damaged between exchange and completion or where a mortgage offer is withdrawn at the last moment (due to the lender or the borrower’s circumstances changing). It is safer to only accept a full 10% deposit on your sale – especially if you are also buying a property – and we recommend that this is discussed with us or the estate agent at the time of agreeing the sale or as soon as possible thereafter. We are happy to provide you with a quote and help work out your finances for your sale and/or purchase. We can also advise you on deposits and all associated risks. Just give us a call on 01273 407 970 for a FREE consultation. by Natasha