pufferfishnz Posted October 7, 2011 Report Share Posted October 7, 2011 Hi all can someone clear this up for me as i am totally confused, i have talked to lawyers, bank, and realeaste agent and i am no clearer as they all give different stories. and im sure someone out there has had the same thing happen to them, it sounds like its pretty common. buying a house, contract says 10% of purchase price to go to realestate agent on settlement day. have been approved for finance we have approx 5% of purchase price. was told by realestate agent that the 10% comes out of our mortgage, as we have to get a bank cheque. was then told by the bank that we cant do that as we cant take the 10% out against our loan told by lawyers that the 10% can be tinkered with the vendors and we can come to some sort of agreement. all of the above i pretty much understand. but what i dont understand is that if they agree to 5% or what ever, how do we pay for it since the 5% is what we are using to secure the mortgage. Confused? cos i certainly am. :dunno: Can anyone shed some light on this for me and my partner please? Thanks Quote Link to comment Share on other sites More sharing options...
phoenix44 Posted October 7, 2011 Report Share Posted October 7, 2011 Your sale and purchase needs to say 5% deposit and not 10%; however if it does not, it's not a huge deal. I really hope it is subject to finance and you haven't gone unconditional. You need to talk to your solicitor and sort it out with him. The bank will automatically send the money to the solicitor's trust account (on settlement day); following which they can forward 10% of the purchase price to the real estate agents. You are not expected to run around with a bank cheque. All of this must happen before 4pm. As long as you have 5% of the total property value (purchase price) and the bank knows this; they will proceed with the settlement. If you do not have the 5%; the loan cannot go through, and if it does... well.. it's not ideal. What is the LEP on your property like? 95% lending is risky! All of my settlements take place before 12pm. Either which ways, your solicitors should be sorting this out with each other and the real estate agent. Quote Link to comment Share on other sites More sharing options...
pufferfishnz Posted October 7, 2011 Author Report Share Posted October 7, 2011 ok thats a good start. our conditions are finance, builders and LIM report. its funny because no where does it say the bank will sort all of this! what does LEP mean? yeah the lawyer said she would talk to the vendors lawyer, to sort it its hard not to worry about it though Quote Link to comment Share on other sites More sharing options...
phoenix44 Posted October 7, 2011 Report Share Posted October 7, 2011 LIM and Builders report? Is that a condition that you stipulated or the bank? LEP is low equity premium. 95% loans are risky. To compensate for that risk (to a certain degree) you get charged LEP by the bank. Quote Link to comment Share on other sites More sharing options...
repto Posted October 7, 2011 Report Share Posted October 7, 2011 // Quote Link to comment Share on other sites More sharing options...
#!CrunchBang Posted October 7, 2011 Report Share Posted October 7, 2011 the 5 or 10% is a deposit, was 10% from the days where houses sold for less than 100K. The real estate agent puts the deposit in a trust account, if they ask for an early release of the deposit, say no, they get paid early if you agree. Quote Link to comment Share on other sites More sharing options...
pufferfishnz Posted October 7, 2011 Author Report Share Posted October 7, 2011 LIM and builders is what we asked for. Bank only asked for a valuation. No-one has said anything about a LEP Quote Link to comment Share on other sites More sharing options...
jackp Posted October 7, 2011 Report Share Posted October 7, 2011 the deposit is normal for buying a house. it is part of the purchase price and therefore the bank should transfer the money once the deal goes unconditional. the deposit is held in trust and is transfered to the seller upon settlement (along with the balance of the purchase price). all of this is very standard and you shouldn't have to worry about anything. it sounds like you need to talk with your bank manager again as this should have been explained to you mush more clearly. if you have been pre-approved for your mortgage then it should have been fairly simple for you. Quote Link to comment Share on other sites More sharing options...
Adrienne Posted October 7, 2011 Report Share Posted October 7, 2011 Take the contract and go back to the bank and ask them to explain it to you again and get them to write it down if necessary. It would help the bank if you wrote down what you have been told before going in because then they can see what you are getting at. Quote Link to comment Share on other sites More sharing options...
reef Posted October 9, 2011 Report Share Posted October 9, 2011 Basically you have to come up with the dep to secure the purchase. The bank has no security so it can't give you the deposit. as you are borrowing 95% you will use your owe money to pay to the real estate agent. Most Real Estate companies asked for 10% , however it can be negotiated. Quote Link to comment Share on other sites More sharing options...
phoenix44 Posted October 9, 2011 Report Share Posted October 9, 2011 buying a house, contract says 10% of purchase price to go to realestate agent on settlement day. Bank arranges this via solicitors trust accounts and their general lending accounts. The real estate agents get their money from the bank - and this is part of the loan you take out for the property. Key phrase is on settlement day. They get 10% of the purchase price before 4pm on the settlement day. The real estate agent's don't need to know how or the terms of your finance with the bank (eg- deposit, LVR etc) - all they need to know is that you have finance. Quote Link to comment Share on other sites More sharing options...
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