92% mortgage, 10% deposit - where does the 2% come from?

R

rmelly

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A friend is looking for a 92% mortgage, so if he has to pay a 10% deposit, he wants to know where does the 2% come from?

What normally happens: Will the bank advance it, a bridging loan, or loan from parents etc?

I wouldn't have thought the bank would advance it as there is no security, so a bridging loan repaid on drawdown of the mortgage?

Or do people negotiate the 10% downwards on the back of showing the vendors solicitor the loan offer?
 
Generally, I ask the vendor's solicitor to accept the reduced deposit - rarely a problem
 
There is nothing to stop buyers negotiating the deposit amount down. Especially in the current market climate. In some (many?) cases sellers will be happy to get an 8% deposit to make the sale.

Post crossed with juke's.
 
On a similar question, if it's a 92% mortgage, and the buyer has to provide 8% of the house's value in cash, will the bank count the deposit as part of that 8%? Will they say "ya, ok, you have 8%, and you can spend some of that on the deposit"?
 
I don't understand. If the bank is lending 92% then they are lending 92% and the buyer has to stump up the remaining 8% (and any other ancillary costs).
 
Ok. I am speaking from an uneducated point of view, so only talking from what I understand.

Say the EA is looking for €5,000 deposit. Apart from that, it's a €250k house. So a 92% mortgage would provide €230k, and the buy has to provide €20k in cash. But can part of that €20k be used to pay for the €5,000 deposit required by the EA?
 
So the deposit is an ancillary cost? But surely it contributes to the 100% cost of the house?
 
simon333 said:
Ok. I am speaking from an uneducated point of view, so only talking from what I understand.

Say the EA is looking for €5,000 deposit. Apart from that, it's a €250k house. So a 92% mortgage would provide €230k, and the buy has to provide €20k in cash. But can part of that €20k be used to pay for the €5,000 deposit required by the EA?
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The €5K deposit comes off the purchase price. The buyer needs to provide the remaining €15K out of his/her own funds and borrows the remaining €230K. The lender doesn't really care about the €20K - it's up to the buyer to deal with this.

Ancillary costs are stuff like legal/conveyancing and related fees etc. in addition to the total purchase price.
 
Great, thanks for the reply. From what you say, the bank has nothing to do with the cash deposit. I pay a certain percantage in deposit, and the final cash contribution will equate to 8%. The mortgage provides 92%, and that's final. And this does not include, for example, solicitor fees.
 
No, unless it's a 100% mortgage the buyer pays the deposit from their own funds. Solicitors and surveyors fees are a separate issue.
 
To get ths sraight:

House value (eg.) = 300k
Mortgage: 92% = €276,000
Buyer provides 8% = €24,000

Deposit (eg.) = €5,000
So, Buyer pays that and still needs to provide = €19,000 (24k minus 5k)

Also, Buyer pays any other fees, such as solicitor.

Is all this correct?
 
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