Booking Deposit

rhillgib

Hi guys,

I was just wondering what happens with the booking deposit on a house once you sign the contract.

Is it returned to the buyer or is it somehow used to offset the purchase price of the house?

Cheers

wench

It forms part of your full deposit.

If the 10% you need to pay is €25K and you've already given a booking deposit of €5K, then you just give your solicitor the balance of €20K at signing.

rhillgib

@wench okay, so, we are moving house and will be paying 250,000 euros in equity with a 70,000 mortgage to complete the purchase. Does that mean, if we have paid a 7,000 booking deposit, that the mortgage draw down will be 63,000 euros?

Thanks!

wench

No, the deposit would be covered by the equity money.

Presumably the house price is €320K, so drawing down 63K would leave you short.

Your set up would be 7K booking deposit, then 25K remaining deposit to get to 10%

On closing contract, the remaining 218K cash, plus the 70K mortgage money.

chops018

https://www.boards.ie/discussion/comment/118498792#Comment_118498792

No. You don't seem to be quite getting it.

If you're buying the property for 320,000 there will be a 10% deposit required.

So:

32,000 deposit required at contract signing.

However, if you paid a booking deposit of 7,000 then as the poster above said, this can be deducted from the 10% required at contract signing stage. So, you will have to pay 25,000 at contract signing, with 7,000 already paid, meaning at that stage you will have paid 32,000 which will constitute the full 10% deposit. Note, these monies will all be held on trust until the sale closes.

So 320,000 less 32,000 = 288,000 required to close. If you have 250,000 equity then you only need a mortgage in the sum of 38,000 to close.

Note, the above does not include any legal fees or engineers costs you might incur so you need estimates of those and factor them in to calculate exactly how much cash you need to close and what amount mortgage suits you best.

rhillgib

@wench Thanks for the reply, and sorry to keep pestering you...

rhillgib

@chops018 So, will we still be expected to pay, in cash, that 25,000 euros, when signing the contract?

Or will that be taken from the proceeds from the sale of our current house?

We are in a chain, so the proceeds from our current house won't be released until we complete on the house we are purchasing...

So, basically, am I going to need 25,000 in cash to pay this deposit or does it all happen between the bank and solicitor?

chops018

https://www.boards.ie/discussion/comment/118498938#Comment_118498938

Unless you come to an arrangement with the sellers of the house you're buying then yes, you will need €25,000 cash ready to be paid on contract signing.

Again, you can ask your solicitor to ask the sellers solicitor to put a special condition in the contract regarding payments etc. if you want to try and structure it differently. But generally it is booking deposit paid at the outset then the balance of the 10% deposit paid on contract signing.

If you are in a chain, usually the proceeds of sale from that will be used to close the sale. You would have paid booking deposit and contract deposit on the house you're buying already with a special condition in the contract that if the sale of your house falls through the contract is rescinded and you get your deposit back.

If you have a solicitor involved you need to sit down with them and ask them all these questions. That's what your paying them for. We do not know the nuances of your sale transaction, cash in hand, purchase transaction, mortgage amount available or indeed the wording of your sale contract and your purchase contract. Just get your solicitor to ensure there are special conditions regarding your mortgage and sale to protect your deposit up until closing.

chops018

Geuze

https://www.boards.ie/discussion/comment/118498792#Comment_118498792

320,000 house purchase

7,000 booking deposit paid at Sale Agreed

The balance of 10% is due when signing contracts

10% is 32k, 7k paid, so 25k in cash required when signing contracts.

This is before mortgage drawdown, so I can't see how the mortgage can be used to finance the 10% deposit.