Do I need to give my solictor a 10% deposit?
Has your solicitor asked you for a 10% deposit and you haven't even exchanged yet? This may sound strange so lets explain what is happening
You are drawing closer and closer to the exchange of contracts on your new home and suddenly your solicitor asks you for a 10% deposit of the house. You may be close to exchange but you are not there yet so this can seem strange and unnerving, particularly since average house prices make 10% amount to around £20,000!
What is it for?
It is a deposit that will be sent to your sellers solicitor to show that you are very unlikely to pull out before completion. By law if you were to pull out before completion and after the exchange of contracts, the seller is entitled to hold on to your deposit. This is a serious amount of money and therefore acts as a huge deterrent from acting in such a way.
Does it have to be 10%?
Actually no. If you are buying a house with a mortgage of over 90% then you presumably don't have a 10% deposit in cash to hand over. In this case you will be paying whatever it is you do have, say your 5% or 7.5% deposit. If you are selling a home as well as buying then it is also possible for your solicitor to take the deposit from your buyer and pass it on to your seller.
Is this deposit the same as the mortgage deposit?
No. If you are intending to pay 15% of the value of the house in deposit and mortgage the remaining 85% then you should still only be handing over 10% at this stage. Of course, in this scenario you will still need to pay the remaining 5% when the time comes before completion.
Is this all an elaborate scam?
The thought did cross my mind after I sent a whopping 10% deposit to my solicitor and the exchange did not go through for further week. I thought, am I just a mark in an elaborate long con? (I used to be a fan of the TV series "Hustle"). It is a huge amount of money so of course keep your wits about you at all times but rest assured this is standard practice when purchasing a property.
