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Contract Deposit

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  • 24-05-2013 11:35am
    #1
    mrskd
    Registered Users Posts: 19 ✭


    We're currently going through the process of buying a new house, sale agreed, booking deposit paid, solicitor reviewing contract. I just have one question, that might seem silly but I'll ask anyway. Our mortgage approval is for 92% of the purchase price but the deposit required on contract signing is 10% (less booking deposit) so my question is, do we pay the balance and we get that 2% back when the funds are drawn down from the bank or what way does that work. It's a significant amount of money that we have factored into being able to use for appliances, etc

    Any help greatly appreciated :)


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    #2
    roro2
    Registered Users Posts: 412 ✭✭roro2


    You pay the 10% initially from your own funds, the bank doesn't need to know this and is not interested anyway. It just needs confirmation of the value of the property, which should match the purchase price, and will issue an offer letter for 92% of this. (As outlined by an AIB mortgage advisor to me recently, I assume your mortgage is with AIB).

    On closing, when the time comes to pay the remaining 90%, ask your solicitor to request drawdown of the full mortgage amount (92%). Most of the 2% will be gobbled by stamp duty and fees anyway.


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    #3
    ted1
    Registered Users Posts: 23,524 ✭✭✭✭ted1


    We just told the agents we were paying a 8% deposit which kept them happy. Really they are just looking for a commitment

    Also you'll need 1% stamp duty so the bank expect you to have this so you only need to make up 1%


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    #4
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    mrskd wrote: »
    We're currently going through the process of buying a new house, sale agreed, booking deposit paid, solicitor reviewing contract. I just have one question, that might seem silly but I'll ask anyway. Our mortgage approval is for 92% of the purchase price but the deposit required on contract signing is 10% (less booking deposit) so my question is, do we pay the balance and we get that 2% back when the funds are drawn down from the bank or what way does that work. It's a significant amount of money that we have factored into being able to use for appliances, etc

    Any help greatly appreciated :)

    Just ask your solicitor to ask the vendors solicitor whether they will accept an 8% contract deposit on account of the mortgage being 92% finance. It's never an issue. As Ted1 said it's just a commitment from you to proceed with the purchase and you are as unlikely to walk away and lose an 8% deposit as you would a 10% one.


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