The process of buying a house involves several important steps. One of the most crucial ones is the exchange of contracts. This is the point at which both the buyer and seller are legally bound to complete the transaction. So, what is the deposit amount required on exchange of contracts?

In most cases, a deposit of 10% of the purchase price is required when contracts are exchanged. For example, if you are buying a property for £200,000, you would typically need to pay a deposit of £20,000 at this stage.

However, the deposit amount can sometimes be negotiable. If you are in a strong buying position with a solid financial history and a good credit rating, you may be able to negotiate a lower deposit amount. Similarly, if the seller is keen to complete the sale quickly, they may be willing to accept a smaller deposit.

It’s important to note that the deposit is not the same as the down payment. The down payment is the amount of money you will need to put down upfront when you take out a mortgage. This is typically around 5% to 20% of the purchase price, depending on the mortgage lender and your individual circumstances.

The deposit you pay at the exchange of contracts is different. This money is held in escrow by the seller’s solicitor until the sale is completed. If the sale falls through before this point, you may lose your deposit. However, if the seller pulls out, they will usually have to give you back the deposit plus interest.

In summary, the deposit amount required on exchange of contracts is usually 10% of the purchase price. However, this can sometimes be negotiable, and it’s important to remember that this is not the same as the down payment on your mortgage. Make sure you speak to your solicitor and mortgage lender to fully understand the costs and requirements involved in buying a property.