How Much Deposit Is Required on Exchange of Contracts

When it comes to purchasing a property, there are many important steps involved to ensure that everything runs smoothly. One of those steps is the exchange of contracts. This is the moment when the buyer and seller sign the legal contract and agree to the terms of the sale. However, one question that often arises during this process is: how much deposit is required on exchange of contracts?

The deposit is a sum of money that is paid by the buyer to the seller as a sign of good faith and commitment to the sale. It is usually a percentage of the purchase price and is paid at the point of exchange of contracts. The remainder of the purchase price is then paid on completion.

Typically, the deposit required on exchange of contracts is 10% of the purchase price. So, for a property that is being sold for £250,000, the deposit required would be £25,000. However, this amount is not set in stone and can vary depending on the circumstances of the sale.

In some cases, the seller may agree to a lower deposit amount, or even no deposit at all, if the buyer is unable to pay the full 10%. This could be due to financial difficulties, or if the buyer is using a government scheme such as Help to Buy, which provides a lower deposit option.

Alternatively, the seller may require a higher deposit amount if they feel that the buyer is a higher risk. This could be the case if the buyer is purchasing the property with a high loan-to-value ratio, or if they have a poor credit history.

It is worth noting that if the buyer does not pay the required deposit on exchange of contracts, they may be in breach of the contract and could potentially lose their deposit and the property. It is therefore important that buyers ensure they have the necessary funds in place before reaching the point of exchange.

In conclusion, the deposit required on exchange of contracts is typically 10% of the purchase price. However, this can vary depending on the circumstances of the sale. Buyers should ensure they have the necessary funds in place to avoid breaching the contract and potentially losing their deposit and the property.


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