The exchange deposit is usually 10% of the purchase price and is paid when contracts are exchanged.
The Standard Conditions of Sale on which your purchase contract will be based, requires that a deposit of 10% of the purchase price is to be paid on exchange of contracts. Ordinarily, your solicitor will request this money from you in advance. Then contracts are exchanged and the 10% is sent over to the solicitors acting for the seller/vendor as your deposit or part-payment.
Exchange deposits are an important part of the property purchasing process in the UK, as they provide protection for both the buyer and the seller. For the buyer, the exchange deposit demonstrates their commitment to the purchase and helps to ensure that the seller is motivated to complete the sale. For the seller, the exchange deposit provides a measure of security that the buyer is serious about the transaction and is likely to follow through with the purchase.
Our Guide to Mortgage Deposits explains this topic further.
What’s the difference between a mortgage deposit and an exchange deposit?
