10

We called an estate agent today to arrange a house viewing, shortly after they called back saying the purchase would require a massive 50% deposit so we cancelled the booking as this is out of our budget. It simply wasn't worth the time to look at a house that far off our budget.

I forgot to ask at the time, but is this common? What reasons could cause the deposit to be so high for a particular house? I thought the financing agreement would be up to the lender but we had not spoken to the bank at all at this point.

This is in the UK.

Update

I called back and the reason the property required such a high deposit for the mortgage is that it wasn't really liveable in its current condition and needed a lot of work done. According to the agents the banks generally will not loan for properties like this unless the buyer has a lot of cash already to be able to do the renovations, hence the 50% deposit.

  • 2
    Possibly the condition of the property was such that the estate agent's "tied" mortgage lender required a 50% deposit. In principle you could try to get a mortgage elsewhere, but if one mainstream mortgage lender is quoting those terms, it might be an uphill battle - and in any case the agent might advise the sellers to ignore your offer, if they thought your financial arrangements were a bit risky. – alephzero Nov 9 '18 at 11:48
  • 2
    That in itself is a red flag, unless the two "agencies" are really just different branches of the same company. Since agencies get paid by commission on the sale price, they don't take kindly the risk of working for nothing because the vendor decided to instruct two agents, not one. – alephzero Nov 9 '18 at 14:03
  • 1
    Interesting, somewhat related thread on Money Saving Expert Why does the estate agent want to know my deposit %?... – TripeHound Nov 9 '18 at 14:46
  • 1
    We haven't talked to the agents at all about our finances, the whole thing was kind of weird. We noticed the property listed on a different agency so we called them about it, they sounded very surprised and said they would expect around a 5-10% deposit on a mortgage for that property. I'm thinking the first agency might have been mistaken when they spoke to us. – Jacob Regan Nov 9 '18 at 15:59
  • 2
    @JacobRegan your 'Update' should be posted as an answer – AakashM Nov 22 '18 at 8:32
2

An update from the OP answered his own question:

I called back and the reason the property required such a high deposit for the mortgage is that it wasn't really liveable in its current condition and needed a lot of work done. According to the agents the banks generally will not loan for properties like this unless the buyer has a lot of cash already to be able to do the renovations, hence the 50% deposit.

  • 1
    Thanks, i was meaning to do this but completely forgot – Jacob Regan Nov 29 '18 at 10:18
1

It's not normal to ask a deposit just to view a house. If you are then interested in buying it, the agent may ask you to pay a deposit to take the house off the market while the legalities go through. But that's usually just a token sum to show you are not just a time-waster.

The amount of deposit you then need when you actually buy the house is between you and your mortgage lender. 5% is probably the minimum. 10% or more is better. The best deals may require 20%. But discuss that with your preferred bank or mortgage broker.

  • 2
    My question may not have been clear, the agent told us that getting a mortgage on the property would require a 50% deposit. They were asking in the sense of, "You'll need a large deposit to buy this, would you still like to view it?". They were not asking for a deposit to actually view the property – Jacob Regan Nov 13 '18 at 9:05
  • @Jacob Regan: The confusion seems to be a linguistic difference. In the US, a deposit is what SimonB says. The money you come up with when getting a mortgage is called a "down payment", or just "X percent down", and anywhere from 5% to 20% is usual. But it's something that's between the buyer and the mortgage lender, not the real estate agent. – jamesqf Nov 13 '18 at 18:34
-2

This is not common from estate agencies in Canada and US. Where I lived, the minimal deposit is usually between 5% and 20%.

Since you did not speak with the agence about your finances, I think there is three options :

1. This is a very special property. Is the property historical? Is the land located in a special place? In such case, yes maybe the estate agency would ask for a 50% deposit.

2. The vendor didn't want you to buy/visit the property for an unknown reason.

3. The estate agents doesn't know their job (very unlikely).

You should call back the first agency to ask for some clarifications. It was probably a mistake. Estate agents doesn't want to lose consumers and a 50% deposit is clearly not something common from them.

  • 1
    And in the US (at least in my experience), real estate agents don't really care about your finances when showing property, other than to ask what price range you're looking at. Once you've indicated that you've decided to buy, they might help you to find a mortgage. But the amount of down payment &c is irrelevant: the buyer gets their money (and the estate agent their commission) from the mortgage issuer. – jamesqf Nov 12 '18 at 18:12
  • 1
    Exactly. Real estate agents want to close the deal and receive their comission. That is why asking for a 50% deposit seems dubious, unless it is really a special property. – Gainz Nov 12 '18 at 19:20
  • The property isn't super special or historic, it's 2 connected cottages being sold as one unit in a normal residential area. They do need a fair amount of renovating though, could this be a reason? – Jacob Regan Nov 13 '18 at 9:07
  • @JacobRegan No, even if there is a fair amount of renovating to do, the deposit should not be 50%. Anyway I am pretty sure they did a mistake since the other estate agents told you a more common % for mortgage deposit. If the first agency was serious, then they just loss a potential consumer, which would kinda surprise me. – Gainz Nov 13 '18 at 15:27

Your Answer

By clicking "Post Your Answer", you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.