Long delay between contract signing & completion

[Dinky]

I've had an offer accepted on a property and am just waiting on the surveyor's report before signing contracts. The vendors are pushing to get the contracts signed as quickly as possible, but want to defer the completion date to well over two months afterwards. Is this normal?

I understand that the usual is to pay 10% when contracts are signed, but we are getting a 92% mortgage, and all our cash is going towards our 8%, legal fees, outlays, etc.

So how does this work? Normally I'd be happy to hand over the 10%, but the long delay concerns me. Does this mean that we'd have to draw down all or part of our mortgage over a month in advance to cover the 10%, and fork out mortgage repayments and interest before we can even gain possession of the property? (Not to mention covering rent and other associated costs in the interim also.) We've asked our solicitor to negotiate 8% when signing contracts, but they seem to want their 10%.

Any advice?

 

[MOB]

The "normal" period between contract and completion is Five weeks. It can be done a lot quicker. It can sometimes be a lot slower.

You don't need to pay the legal fees, outlays etc. until just before completion. Actually, in many law firms (my own included) you would not pay the legal fees until after completion (though the outlays are always paid up front).

So you can go ahead and pay a 10% deposit, and you will get back the 2% "surplus" on completion, which your solicitor can use to fill out the gap on the fees\outlays money.

Of course, if there is no stamp duty, the fees and outlays money is unlikely to come to 2% of the house price. In this case (unless there is some risk of losing the house to another bidder), stand your ground and insist on a slightly reduced deposit. Most vendors will accept this and most vendors solicitors will not make a song and dance about it.

My experience to date has been that the legal hassles and transaction costs would outweigh the benefit of getting a partial drawdown to fund your deposit. However, with the advent of 100% mortgages, it may be that lenders are now beginning to put more user-friendly facilities in place for lending deposits.

 

[Dinky]

2% seems like a small percentage until you consider the price of the property. Organising a partial drawdown is not something I want to get into, though, so I'd rather fork out the extra up front.

 

[WizardDr]

But the 10% deposit was always going to have to be paid at contract stage.. you would have to accelerate closing .. to get the bank to give you the rest ..which is a mere 2%.. seems you were going to have to put up 8% anyway outside of fees..

 

[Dinky]

But the 10% deposit was always going to have to be paid at contract stage.. you would have to accelerate closing .. to get the bank to give you the rest ..which is a mere 2%.. seems you were going to have to put up 8% anyway outside of fees..

We already have the 8% put aside, plus extra cash for the fees on top of that. That's not an issue. The problem is the remaining 2%, a "mere" couple of grand.

We'll use the cash set aside for other costs, as MOB suggests, and if there was a normal gap between signing contracts and closing we wouldn't mind going back to our lenders for the extra, but because the vendors want to push the completion date to what seems like an excessive 10 weeks after contracts are signed, I don't want to have to fork out for their dawdling.