Mortgage advice for buying a new home

[Jturner98]

Hello, I’m in the process of buying a new home but they want me to put a 10% deposit of the price of the house. The price of the house is £429,995 and a 10% deposit will be about £43k.

I’ve got an agreement in principle set up for this amount but I’m wondering if I take money out to pay this deposit it will void it and I’ll need a new agreement in principle.

 

[The Ham]

Hello, I’m in the process of buying a new home but they want me to put a 10% deposit of the price of the house. The price of the house is £429,995 and a 10% deposit will be about £43k.

I’ve got an agreement in principle set up for this amount but I’m wondering if I take money out to pay this deposit it will void it and I’ll need a new agreement in principle.

An agreement in principle is just that, when you talk to the lender about finalising the deal they will be able to provide you with the answer to of you need to do something different.

Assuming that the money for the deposit is tied up in the property that you are buying and so it shouldn't cause problems on the Loan to Value percentage. However I would have a solicitor on board before paying any money to anyone. As you want to understand the various implications of what you are being asked to do.

 

[Elwyn]

Buying a house is probably one of the biggest transactions you will ever make in your life. Best to get advice from a solicitor. If someone here gives you duff advice, which you choose to follow, you have no comeback, but there is in the event of proven negligence by your solicitor, and he/she should be trained in that area of law. Which most here are probably not.

 

[Gloster]

Are you talking about you putting up 10% of the total value of the property when buying and the mortgage lender supplied the other 90%, which you slowly pay back? Or are you talking about the 10% deposit which is paid over to the seller (but held by their solicitors) when you exchange contracts (the point at which you are committed to going ahead with the purchase)? In general, I would suggest that you study your documentation carefully, make sure you know which legal or financial terms are being used and then, if there is still any doubt, contact your solicitor.

 

[Mcr Warrior]

Would have thought that the OP would need a firm mortgage offer from the finance provider, not just an agreement in principle. Once contracts have been exchanged, the OP is normally then committed to buy, and the OP's solicitor (assuming that there is one) will want to know that there is certainty of funds in order to be able to complete the property purchase transaction.

If not, the OP is likely to lose their exchange deposit, which is often, but not always, 10% of the property purchase price (coincidentally, in the scenario outlined, this is the same % as the amount that the OP has to find from their own resources and isn't being provided by the financier).

P.S. Take it that there's some spare money available to meet the additional stamp duty land tax costs, as well as the solicitor firm's various fees and disbursements.

 

[Gloster]

A solicitor should check that the buyer has sufficient financial resources to complete the purchase, pay the solicitor’s fees and other legal requirements. Indeed, they might be seen as negligent if they did not. However, they are not concerned with costs that are seen as the purchaser’s responsibility, such as removals.

If you have any doubts, speak to your solicitor, but be well prepared so you are using exactly the right legal wording during the conversation. Solicitors charge, but that will be a pittance compared to the cost of the purchase itself and will ensure it goes through. It is a bit difficult to see a solicitor at the moment: all my communications were done by e-mail (better than a ‘phone call as you can keep a hard copy).

 

[Starmill]

I’ve got an agreement in principle set up for this amount but I’m wondering if I take money out to pay this deposit

I think it would be useful for you to clarify here. Do you need to borrow the money from a bank or other consumer credit act licensed firm? Or are you going to just borrow it from friends and family? How much of your deposit is on hand in cash already?

 

[Farang]

Buying a house is probably one of the biggest transactions you will ever make in your life. Best to get advice from a solicitor. If someone here gives you duff advice, which you choose to follow, you have no comeback, but there is in the event of proven negligence by your solicitor, and he/she should be trained in that area of law. Which most here are probably not.

100% this. Choose your solicitor carefully - recommendations from people who've bought recently are best.

 

[DarloRich]

Seek advice from an Independent Financial Advisor (IFA). Do not use any advisor or service offered by an estate agent or developer. The same goes for solicitors. Choose your own. Go and find a boring solid ( perhaps even dull) old school, high street, firm. Please don't use the one offered to you by a developer.

A solicitor should check that the buyer has sufficient financial resources to complete the purchase, pay the solicitor’s fees and other legal requirements

Are you sure? They will ask for funds on account to cover searches and fees and not exchange contracts until they have a mortgage offer and the cleared balance plus costs, stamp duty and most importantly their fees ( ) from the buyer. No one has ever asked me to prove I had the money to pay the bills or even the balance of the purchase monies. The solicitor should be checking where your money comes from to cover money laundering regulations but that is about all.

 

[Gloster]

Are you sure? They will ask for funds on account to cover searches and fees and not exchange contracts until they have a mortgage offer and the cleared balance plus costs, stamp duty and most importantly their fees ( ) from the buyer. No one has ever asked me to prove I had the money to pay the bills or even the balance of the purchase monies. The solicitor should be checking where your money comes from to cover money laundering regulations but that is about all.

I had a few months ago to prove that I had sufficient funds and show that their source was legitimate. Showing my building society pass book was sufficient for the first and a letter from the solicitor handling my mother’s will fulfilled the second condition. My understanding is that making a reasonable check that the buyer has the funds is, at the least, regarded as good practice by the solicitors’ regulating authority.

As said, use a solicitor that has been personally recommended by someone who has recently bought or sold. Even good reviews on websites may not be much use: one company had a lot of (probably genuine) good reviews. But check further and they were all for a solicitor who no longer worked for them and was a divorce specialist. A good solicitor may be expensive, but is worth it.

 

[DarloRich]

I had a few months ago to prove that I had sufficient funds and show that their source was legitimate. Showing my building society pass book was sufficient for the first and a letter from the solicitor handling my mother’s will fulfilled the second condition. My understanding is that making a reasonable check that the buyer has the funds is, at the least, regarded as good practice by the solicitors’ regulating authority

Thanks - that seems very fastidious. No one has ever asked me to do that. I must look trustworthy

 

[TheBigD]

Seek advice from an Independent Financial Advisor (IFA). Do not use any advisor or service offered by an estate agent or developer. The same goes for solicitors. Choose your own. Go and find a boring solid ( perhaps even dull) old school, high street, firm. Please don't use the one offered to you by a developer.

^^^this^^^

I'll also add to find someone who is "whole of market". And do your own research and check what mortgages you can get to what they offer.

When I bought my new house back in 2012 (before help to buy) the developer was insistent on using their financial adviser. When she was informed that I had found a better deal (with nationwide) than she was offering, with no fees and a lower interest rate she flatly refused to consider it. After some "robust" conversions between the developer and myself, she was removed from the equation.
That was all pre buy to let, I suspect now it's a developer's market that the result would be different and the developer would just move on to the next buyer .

 

[PupCuff]

My advice would be make sure you get a decent solicitor. I was buying a place a few years back, my solicitor dithered and dithered over ridiculous things and didn't do what I was paying them for (of course still took the money) and eventually the sale fell through.

'We need bank statements'
'No, digital bank statements won't do' (...thats all they do)
'No, you can't print the digital bank statements'
'No, we can't accept the bank statements the person at the bank has sorted because your address is on the front of the bank statement and the rest of the stuff is on the back'

If I'd have been the bloke at the bank I'd have told me to bugger off after the fourth time of having to go back, but there we go...