When do you pay your house deposit

The process of buying your next home can be physically and mentally wearing, with the stress of organizing every detail and worrying about missing something important.

One of the biggest challenges is understanding how much everything will cost - from the property itself to additional services like surveying, removals, and legal procedures. Knowing when payments are required is essential, and a key question many buyers ask is, "when do you pay your house deposit?". 

By clarifying this along with other financial milestones, you can ensure a smoother, less stressful move.

A deposit is used to secure the services of whichever organisation you want to employ or to reserve the goods - and in this case, a home - so that no-one else can lay claim to them.

The payment of bills may be a one-off or a series of payments, depending on the organisation involved and how they want to be paid.

Conveyancing solicitor

With Homeward Legal, we provide a quality, value-for-money conveyancing service that is protected by our “no completion, no fee” guarantee. This means that, should your transaction fall through at any stage for any reason prior to completion, you won't be billed for the fees.

When you've found a home that you want to buy, you should contact us as soon as possible to get the legal processes moving quickly to better guarantee as swift a completion as possible.

At this stage, you'll be asked to pay a deposit of £180 for our services and £379 for the standard searches, which your appointed solicitor will initiate as soon as you instruct us to work for you. 

Your solicitor will explain the whole legal process to you at the start so that you know what to expect and when, and what your role is (e.g. completing forms, signing documents and so on). Disbursements, which are the third-party costs such as the searches, are extra costs and not part of the fees for our work. 

So, should your transaction fall through before completion, all you will have to pay is the cost of the disbursements (minus the sum already paid for the initial searches). The deposit for our services can either be returned to you, or it can be transferred to the next transaction when you find another property you'd like to purchase.

If the transaction reaches the completion stage successfully, the deposit will be highlighted on your final bill, subtracted from the overall fees.

Estate agent

Sometimes a reservation fee (or deposit) is required by the estate agent. Most often, this will be to secure a property that is a new-build and effectively takes that plot off the market, thus removing the competition from other potential clients. 

This may be a flat fee or a percentage of the overall costs.

However, you should be sure you understand what it is you're paying for and to whom (whether it's the estate agent, the builder or a management company) and what your rights are. It's also important to understand what happens in the event that the transaction falls through for any reason - will the deposit be returned? Can it be transferred to another purchase? Is it non-refundable? Does it form part of the final payment? Under what circumstances will the deposit be forfeited?

If you are at all concerned with understanding the legal side of things in these instances, you can always ask your conveyancing solicitor for advice on what it means and what steps you can advisedly take.

Additional disbursements

At Homeward Legal, we work hard to provide you with a high quality and fast service. Most of the transactions will follow a familiar path, but, on occasions, something arises that has not been planned or budgeted for. For example, the survey highlights some issues that the conveyancer needs to follow up on, or the main searches highlight something that would be advisable to investigate further (such as evidence of coal-mining history in the area, flooding, evidence of Japanese knotweed or other invasive plants, and a number of other specialist requirements for additional expert knowledge).

In such cases, your solicitor will discuss your options with you, ensuring you have sufficient information to make the right decision about getting the relevant expertise to look into the highlighted issue in more detail. 

These additional searches and reports are disbursements - costs payable to a third party - and they will be added to your final bill, noting that it is a cost that has to be paid should the transaction fail to reach completion.

Exchange of contracts

The most expensive deposit in the whole home-buying process comes at the exchange of contracts milestone. 

When you sign the contracts and your counterpart in the sale also signs, your respective solicitors will formally exchange contracts. From this point on, you are contractually obliged to see the purchase through to the completion stage.

You will also need to arrange the payment of a deposit, which is set in the terms of the contract for the exchange step. It is usually set at 10% of the agreed purchase price, although certain circumstances may require a different agreement. Your conveyancing solicitor will make it clear what the percentage is for the deposit and therefore what the amount is that you should pay.

This deposit is usually required by the day before the planned exchange of contracts, so that it can be confirmed that you have the determination and the funds to continue on to completion. If the deposit funds are not available, this will force a delay of the contract exchange until it can be confirmed that you are financially able to eventually complete on the transaction.

The payment of the deposit is handled by your conveyancing solicitor on your behalf, but it is your responsibility to ensure that the funds are in place, whether you have to involve a mortgage lender or other persons in providing the money.

The deposit is held on account until completion, where it is then added to the remainder of the cost of the property at completion.

Completion

For the day of completion to go smoothly, especially where there is a long chain to deal with, it is advisable to ensure the remaining funds to pay for the home are in place ready for transfer from your conveyancing solicitor to the seller's legal representative.

This is the payment of the outstanding value (usually 90% of the agreed price) - having taken off the deposit already paid.

Bank transfer fees

With the large sums that are involved, particularly at the exchange of contract and completion stages, if a mortgage lender or bank is involved, it is quite likely that there will be a bank transfer, which is an electronic and secure process where funds are transferred from one account to another, with all the financial traceability that is required for anti-money-laundering requirements.

Each bank and lender will handle such transfers differently and will usually charge a fee for the process. It's worth understanding what that process is and how much they will charge you so that there are no surprises for your budget management.

Stamp duty

There are different thresholds over which a percentage of the house purchase price is triggered for payment to HM Revenue and Customs.

This will be managed on your behalf by the conveyancing solicitor and form part of the final bill as a third-party cost.

Note that English (Stamp Duty Land Tax) and Welsh (Land Transaction Tax) transactions operate slightly differently, so it's worth checking the requirements as part of your preparation.

Final solicitor bill

You're there! You've got your keys, and the removals people have left you with boxes piled up and furniture in strange configurations. There's just one more bill to pay and that's your conveyancing solicitor's final bill for the full service.

For a Homeward Legal solicitor, this will be fully itemised and clearly laid out so that you can see what each amount is and why you're being asked to pay for it, which will include the HM Land Registry fee for changing the ownership details.

The bill will be laid out so that the initial deposit (£180) is taken off the total, as is the initial payment to cover the searches (£379) from the list of disbursements. 

But, even here, if there is anything you don't understand or is not clear, your conveyancing solicitor is still on hand to explain it to you.

If you are buying your next home and want the highest standard of legal services for the transaction, with a clear understanding of what you will be required to pay and when, then look no further than Homeward Legal.

The experts at Homeward Legal will talk you through each stage of the process so that you know what is happening at any point and why and what your role is. They are well-versed in all aspects of the conveyancing process, providing a quality conveyancing service at a fee that is great value for money!

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to purchase or sell your next home.