10% on signing of contracts query

Hi all.

This is something that really confuses me and I have asked my broker and he never gave me a straight answer about it.
My dilemma is the following: you get 92% mortgage right, so you need the balance of 8% yourself which is fine. You pay 6k booking deposit and when you go to sign the contracts the amount required then is 10% of the purchase price when in fact you should really be paying 8% of the purchase price when signing contracts as at closing the mortgage cheque for the remaining 92% will be drawndown.
So what happens here?, can you go into your solicitor with the 8% or do you have to pay the 10% amount that is on the contracts.

Also, on the deposit. You get that back on closing less the solicitors fees, is that correct??.

Although 10% is the deposit traditionally payable on signing contracts (and it incorporates whatever booking deposit paid to the estate agents) it is not mandatory. If you are getting a 92% mortgage your solicitor should talk to the vendors solicitor and agree an 8% deposit. If the vendors solicitor absolutely insists on the full 10% you'll have to beg or borrow (not steal!) the additional 2% which will then be returned to you on the day of closing via the mortgage cheque.

Sarah

www.rea.ie

You pay 10% on the signing of contracts LESS THE BOOKING DEPOSIT. So if the 10% amounts to 30,000 and you have already paid 6,000 then you only pay 24,000. It may be easier to explain if you give actual figures. If there is a surplus from the loan cheque the solicitor usually takes the fees from this.

10% of the purchase price when in fact you should really be paying 8%

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The 92% is the mortgage you will be getting from the bank, the "10%" on signing is a rough guide solicitors use. The 6k you pay is included as part of the 10%.

What you can do is ask the solicitor can you pay 8% deposit (and that includes the 6k you have paid) on the day you are signing contracts. That should be no problem.

Also, on the deposit. You get that back on closing less the solicitors fees, is that correct??.

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I am not sure, in our case the deposit was seen as part of the deposit - and we paid our solicitor seperatly (he was a family friend) ..

Most solicitors would be agreeable to a lesser %. They just want the buyer so hand over a significant sum to ensure they commit to the purchase. In our own case we should have paid approx 50k and were struggling to come up with it, in the end our solicitor arranged for us to pay 30k.

Thanks guys, so should I ring our solicitor to contact the builders solicitor before the contracts are sent out so that they put the correct amount payable on signing on the contract.
Here are the figures anyway:

Purchase Price : €378k. Mortgage amount (92%) : 347,760. Balance of funds required is: €30,240.
€5,800 booking deposit

So, I assumed that we pay €30,240 on signing and when closing the solicitor takes her fee out of our deposit and we get the balance left back.
Does that sound correct and I am going the right way about it?.

Mag2006 I have done out a rough completion statement and an open to correction on this of course!!!! the figures will change if you do not pay a full 10% deposit and I have not taken stamp-duty into account. (you might need more € for this)


378,000.00 Purchase Price
5,800.00 Less Booking Deposit paid to auctioneer (own funds)
32,000.00 balance of 10% Deposit on signing of Contracts (own funds)
__________
340,200.00 Balance to be paid on Completion
347,760.00 Loan Cheque received
__________
7,760.00 left over for Fees & Outlay and Stamp Duty etc...

Thanks Sheena, it's a brand new house and we are FTB's so no stamp duty is payable.
Gawd...it's scary thinking that's how much we have to furnish the place coz it's our first home but we know certain things can be done a bit cheaply to tie us over except for the floors and tiles and appliances and beds (we have 2 kids aswell so lots to buy!). I think €7k will go a long way anyway. I actually thought we would have more left...ah well :-(

If its a brand new house will there be stage payments involved? Have you spoken to your solicitor to confirm you are exempt from stamp duty?

Oh yeah we are exempt, it's in a new development and it's up already which is great and it's under the 1325 square foot threshold for stamp duty.
I'm just trying to work out what we can actually pay for in the next few weeks as with the kids I don't really want them on cement, would like to be able to manage getting the floors down in the living, dining and bedrooms and the tiles down in the kitchen plus we need beds. We can improvise on the sofa and table and chairs and my parents are buying the appliances as a late wedding present.

Well according to my rough calculations you will have €7,760 left over after the purchase of the house but with Solicitors fees + VAT + Outlay you may realistically have nearer to €5k left over. You can always ask your solicitor for an accurate sompletion statement tomorrow so you know exactly what you have left to play with...Best of Luck in your new home.