How much deposit?
The Standard Form of Contract provides for payment of ten per cent of the purchase price on exchange of contracts.
Such a deposit used to be rare. The “chain” relies upon the First Time Buyers (FTB) deposit being passed up the “Chain”. Now a FTB usually requires at least a ten per cent deposit in order to qualify for a Mortgage but that deposit will be passed up the “chain” and by the time it reaches the top may be only a single figure percentage of that price.
The FTB is the weakest link in the “chain” but provided the amount of their deposit is sufficient to make it unlikely that they will not complete and forfeit that sum, everyone else in the chain is happy that they do not have to incur the delay and the expense of borrowing their deposit from their Bank.
There used, before this current recession, to be rare exceptions as some FTBs could obtain a mortgage of 100% or over This presented real difficulties in a “chain”. Should this situation ever occur again we will advise on the alternatives in such circumstances.