More mortgage advice

[lee_sufc]

I have applied for, and been accepted for a 100% mortgage. I have also made an offer on a property which has been accepted.

This is our first time purchasing a property and we've been looking online to find out what happens. I have read that when it comes to exchanging contracts, this is normally when a deposit is paid. But seeing as we have a 100% mortgage, how will this work?

We have saved 3k for solicitors fees etc...

 

[Yorkshire Blue]

The deposit is payable on exchange.

Are you in a chain, or is this your first property?

 

[Ron Manager]

Exchange is when you are legally committed to buy the property - the completion date is set at that point.

As you are having a 100% mortgage there is no deposit payable at this point - other than that it works as any other mortgage/house purchase.

 

[lee_sufc]

The deposit is payable on exchange.

Are you in a chain, or is this your first property?

This is our first property

 

[Shrimp_Stu]

Check out the forums over here for more specific advice:

MoneySaving Expert - House Moving

 

[Yorkshire Blue]

The deposit is payable on exchange.

Are you in a chain, or is this your first property?

Oops, you've already said its your first property, otherwise you would normally use the deposit you receive from selling your existing place.

I think you'll probably need to arrange some sort of bridging loan between exchange and completion but I don't know the first thing about these. Ask your mortgage broker about it, and even then I'd guess its worth shopping around.

Surveyors and solicitors fees aren't normally paid until completion, so you can probably use that £3k towards the deposit. Make sure you aren't paying a 10% deposit, 5% should be the max (as your opening position)

 

[Phippsy]

Yorkshire- why should you only pay a 5 % deposit? the reason i ask is that my gf and i are in the process of saving for our first place and have been told to try save 10% to put down.

 

[Yorkshire Blue]

Yorkshire- why should you only pay a 5 % deposit? the reason i ask is that my gf and i are in the process of saving for our first place and have been told to try save 10% to put down.

I'd recommend saving for 10% anyway, its always a good idea to budget conservatively. I suspect you can probably get better mortgage deals on a 90% mortgage than on a 100% or a 95% mortgage (as there will be less risk in a 90% mortgage for the mortgagee), but I can't say I've ever applied for a mortgage so have never had the need to look into it.

As for why to demand a 5% deposit, there's no real need for a 10% deposit. Five per cent shows your commitment and remains a sufficient deterrent to stop someone pulling out, particularly considering how house prices have risen over the years.

If the vendors are holding out for a ten per cent deposit because they require a 10% deposit themselves on their purchase, suggest that they tell their vendors that they can only give a 5% deposit. There's normally no substantive reason for a 10% deposit, other than tradition, but why should a purchaser suffer unnecessary hardship (eg having to obtain a bridging loan)? The deposit isn't a fixed amount, but should be negotiated between the parties. I certainly wouldn't offer a deposit of more than 5%, although I might reluctantly have to concede it but only after trying to negotiate it down.


Finally, there is another way round the whole need for deposits, which is simultaneous exchange and completion, but the likelihood is that this would act to push back exchange to the completion date, rather than bring completion forward to the exchange date.

 

[Holy Joe]

I have applied for, and been accepted for a 100% mortgage. I have also made an offer on a property which has been accepted.

This is our first time purchasing a property and we've been looking online to find out what happens. I have read that when it comes to exchanging contracts, this is normally when a deposit is paid. But seeing as we have a 100% mortgage, how will this work?

We have saved 3k for solicitors fees etc...

A friend of mine has just bought a house with a 100% mortgage. They exchanged and completed at the same time because they didn't have a deposit.

 

[DTS]

A friend of mine has just bought a house with a 100% mortgage. They exchanged and completed at the same time because they didn't have a deposit.

Spot on Matt E.

5% us normally given as an act of goodwill but if its a 100% purchase then you have nothing to give.

As for the 10% comments - That is to get a better rate but has no effect at all on the purchase or exchange itself.

DtS