Buying a home in the UK involves several important financial steps, and understanding when to pay your deposit can help you prepare for a smooth purchase. The timing usually depends on whether you are buying a property in England, Wales, Scotland, or Northern Ireland, as the process can vary. From exchanging contracts to completing the purchase, this guide explains when the house deposit is paid, how much you may need, and what buyers should know before transferring their money.
The Deposit Is Paid at Exchange of Contracts
Exchange of contracts is the moment the sale becomes legally binding. Before it, either side can walk away. After it, pulling out normally house costs you your deposit. NI Direct’s home-buying guide describes exchange as the point where the sale becomes binding and says you’ll usually need to pay at least five per cent of the price to the seller at this stage.
Lloyds Bank makes the same point in its exchange of contracts guide: once the contract is signed you’re legally bound to buy, and that is when the deposit is paid.
Step by Step: How the Deposit Moves
- Offer accepted. You normally pay nothing towards the deposit yet. Some new-build developers charge a separate reservation fee, so check what is refundable.
- Mortgage offer and searches. Your solicitor or conveyancer will want to see where your deposit funds have come from (savings, gift, sale proceeds) to meet anti-money-laundering checks.
- Funds sent to your solicitor. Send the money to your solicitor’s client account a few days before exchange. Don’t leave it to the morning of exchange.
- Exchange. Both solicitors confirm the contracts are identical, usually on a recorded call. Your solicitor then sends the exchange deposit to the seller’s solicitor, who generally holds it until completion.
- Completion. The rest of the money arrives (your mortgage plus any remaining deposit), the seller’s solicitor confirms receipt and you get the keys.
How Much Is the Exchange Deposit?
The traditional figure is 10% of the purchase price, but a smaller deposit is often agreed. Yorkshire Building Society’s guide to completion day explains that the buyer’s conveyancer passes the deposit on to the seller’s conveyancer, and NI Direct sets the usual minimum at five per cent. Moneybox’s first-time buyer guide adds that if your total deposit is only 5%, you won’t be asked to transfer more than that, while a deposit above 10% is usually topped up at completion.
5% vs 10% on Common Prices
| Property price | 5% exchange deposit | 10% exchange deposit |
|---|---|---|
| £200,000 | £10,000 | £20,000 |
| £300,000 | £15,000 | £30,000 |
| £450,000 | £22,500 | £45,000 |
Important catch: solicitors point out that even where you hand over only 5% at exchange, the standard contract can leave you liable for the full 10% if you later fail to complete. Ask your solicitor to explain the exact clause before you sign.
How Long Between Exchange and Completion?
The gap is agreed by both sides. Moneybox says a window of seven to 28 days is normal, and exchanging and completing on the same day is possible but uncommon. If you’re in a chain, nobody exchanges until everyone in the chain is ready.
Is the Deposit Safe?
Until exchange, your money sits in your solicitor’s client account. After exchange, the seller’s solicitor normally holds it until completion, where it counts towards the price. The real estate risk is on your side: if you withdraw after exchange, you can lose it and may also face a claim for further losses. If the seller pulls out, you would generally expect your deposit back, and could pursue compensation.
Other Costs Due Around the Same Time
The deposit isn’t your only bill. Solicitors usually ask for legal fees and Stamp Duty Land Tax (SDLT) funds on or before completion, and SDLT must be filed and paid within 14 days of completion, as GOV.UK’s SDLT guidance explains. As of this guide, the standard residential rates start at 0% on the first £125,000, and first-time buyers can claim relief on homes up to £500,000 (no SDLT on the first £300,000), though rates change, so check the current GOV.UK residential rates before budgeting. Anyone buying an additional home faces a 5% surcharge on top. MoneyHelper’s stamp duty guide is a good plain-English companion.
Tips to Avoid Deposit Delays
- Open a conversation with your solicitor about source-of-funds evidence as soon as your offer is accepted.
- Move money to your solicitor’s account at least a day or two before the planned exchange, and verify the bank details by phone to avoid payment fraud.
- Keep gifted-deposit paperwork (including a signed gift letter) ready.
- Arrange buildings insurance to start from exchange, because you’re legally responsible for the property from that point.
- Don’t book removals until your completion date is written into the contract.
Frequently Asked Questions
Do I pay a deposit when my offer is accepted?
No. An accepted offer isn’t legally binding, and the main deposit is not due until exchange. Estate agents or developers may ask for a small reservation fee in some cases.
Is the deposit paid on completion day?
Not usually in England, Wales or Northern Ireland. The exchange deposit is paid at exchange. Any remaining part of a larger deposit is normally paid at completion.
Who holds the deposit?
Typically the seller’s solicitor, in a client account, until completion.
What if I’m buying in Scotland?
Scotland uses a different legal process (missives), and the timing of payments can differ. Ask your Scottish solicitor to confirm when each payment is due.
Can I pay less than 10% at exchange?
Often yes, if the seller agrees, commonly 5%. Be aware of the liability point explained above.
