Signing contracts today - 10%?

quilmore

Hi
I'm signing contracts today
I had give the EA 5k when the house went sale agreed but now the solicitors are asking to bring the deposit to 10% on signing of contracts
I've managed to agreed to 8% as my bank is giving me 92%
but anyway, is that OK? I thought the deposit was the one I gave the EA and I wouldn't be giving them any money extra until the closing date
I'm FTB and I'm not sure if I'm being tricked here
what do you think?

bobbysands81

quilmore wrote: »

Hi
I'm signing contracts today
I had give the EA 5k when the house went sale agreed but now the solicitors are asking to bring the deposit to 10% on signing of contracts
I've managed to agreed to 8% as my bank is giving me 92%
but anyway, is that OK? I thought the deposit was the one I gave the EA and I wouldn't be giving them any money extra until the closing date
I'm FTB and I'm not sure if I'm being tricked here
what do you think?

I think that is fairly standard practice mate.

5k on "Sale Agreed", 10% on signing contracts with the balance going through on closing.

I'm sure if that ain't standard we'll both be corrected fairly quickly!

TwoShedsJackson

bobbysands81 wrote: »

I think that is fairly standard practice mate.

5k on "Sale Agreed", 10% on signing contracts with the balance going through on closing.

I'm sure if that ain't standard we'll both be corrected fairly quickly!

That is standard practice, the 5k you put down first is supposed to be a deposit which ensures the seller takes the house off the market etc. however it is not legally binding on either side so you could withdraw and take it back, or the seller could decide to accept another offer etc. and you would get the 5k back. Really this money is just to prove you are a serious buyer.

The 10% (or 8%) that you hand over when you sign the contracts is required to ensure you do not pull out of the sale after the contract is signed. If you do, you are not entitled to get this 8% back. Likewise, the seller cannot suddenly now decide to sell to someone else. Once contracts are signed it's binding on both parties.

irlrobins

It worries me that someone buying a house is not aware of the normal purchase procedure. If they haven't researched this, what else have they not researched and understood??

quilmore

irlrobins wrote: »

It worries me that someone buying a house is not aware of the normal purchase procedure. If they haven't researched this, what else have they not researched and understood??

you're right
I asked people and they still think this practice is not common, that's why I posted it here
when I investigated the procedure they said the deposit is the one I gave to the EA and next step was the closure of the deal

any reading you can recommend? I think I've read plenty, but it seems it's not enough...

irlrobins

I've never seen a case where you purchase a property with just a booking deposit followed by the full amount at closing. If that was the case, the buyer could walk away right up to the day of closing without penalty. The 10% at contract signing ties the buyer and vendor into the purchase.

Lots of sources of info available.

The banks will have a home purchaser pack that will usually contain a guide to buying a property, often with a step by step process.

It's your money has a guide on mortgages.

The law society has a leaflet on moving home.

MyHome has a buyer's guide.

Ask about money has a mortgages and buying and selling section. Some good info there amongst the posts.

And of course boards.ie!

What I would do is read up on the guides listed above. If you have any questions or queries, draw up a list of them and post them here. People will reply with advice and information.

And of course your bank/broker and solicitor should be advising you at every stage. That's what they're there for!

SueWho

How did this process work for 100% mortgages so when people had no deposit other than the 5k booking deposit? Did the banks lend the first 8-10% to the purchaser before the official draw down of the mortgage?

irlrobins

Some people got a second loan from credit union, effectively creating a 110% mortgage.

Jo King

The usual procedure is
1. Booking deposit to estate agent.
2. Balance of 10% on signing contracts
3. Remainder on completion.

If the o/p is being asked for 10% rather than the balance of 10% it sounds like someone is trying to pull a fast one. A lot of businesses have cash flow problems these days and like to get in as much money as possible as soon as possible.

Paulw

SueWho wrote: »

How did this process work for 100% mortgages so when people had no deposit other than the 5k booking deposit? Did the banks lend the first 8-10% to the purchaser before the official draw down of the mortgage?

I was told that for a 100% mortgage, the bank would write a letter stating that the buyer was getting a 100% mortgage, and that was enough.

In the end, I went for an 92% mortgage, rather than 100%, so never found out.

quilmore

Jo King wrote: »

The usual procedure is
1. Booking deposit to estate agent.
2. Balance of 10% on signing contracts
3. Remainder on completion.

If the o/p is being asked for 10% rather than the balance of 10% it sounds like someone is trying to pull a fast one. A lot of businesses have cash flow problems these days and like to get in as much money as possible as soon as possible.

my mistake
I should have said they asked me for the balance to make up the 10% (end up being 8%)

havana

Totally normal for the deposit to be 10% or sometimes if purchasing a new property it can be a fixed amount. If you get a 92% mortgage it means you will have some excess which the solicitor will either give back to you or usually it goes off the fees. Has your solicitor not sent you out a breakdown of costs which includes everything and shows exactly the amount you need to complete?

havana

Totally normal for the deposit to be 10% or sometimes if purchasing a new property it can be a fixed amount. If you get a 92% mortgage it means you will have some excess which the solicitor will either give back to you or usually it goes off the fees. Ask your solicitor to send you out an breakdown of costs which includes everything and shows exactly the balance you will need to complete?

quilmore

yes, but the draft was to be made to the seller's solicitor
anyway, all fine now
thanks all

Jo King

That is completely normal. After you sign the contract the EA is entitled to his fee and will take it from his deposit. The vendor is entitled to forfeit your deposit if you do not complete.