When do you pay the deposit for a house?

• You pay your house deposit when you exchange contracts, not when your offer is accepted.
• The exchange deposit is typically 10% but can be lower - it may differ from your total mortgage deposit.
• New build purchases require a reservation fee first, then the exchange deposit later.
• If you pull out after exchange, you'll lose your deposit - before exchange, your deposit money stays with you.

When buying a property, the largest lump sum of money you pay will likely be your deposit (although stamp duty could be more in some cases). So, it makes sense that you’d like to know when you have to pay your deposit. To help, here is our guide to when you need to pay your house deposit and what else you might need to know.

A house deposit is a percentage of the property’s purchase price that you pay as security to commit you to buying the property. It’s essentially your stake in the transaction and forms part of your overall payment towards the house.

Learn more: How much deposit do I need for a house?

The key thing to understand is when you actually pay this deposit – as it might work a little differently to what you think.

You don’t pay your deposit when your offer is accepted, during the conveyancing process, or even when you get your mortgage approved. You pay what’s called an exchange deposit when you exchange contracts with the seller, which typically happens 7 to 28 days before completion.

What’s an exchange deposit? (exchange of contracts deposit)

It’s important to remember that your exchange deposit might be different from your mortgage deposit. While your mortgage deposit (what you’re putting down overall) might be 15%, 20%, or more of the property price, the exchange deposit is typically 10% but may be lower. This is paid on exchange when the purchase becomes legally binding.

The remainder of your deposit is then paid on completion day with the rest of the purchase price.

Understanding this timeline is crucial for managing your finances and ensuring you have the deposit funds available when they’re actually needed.

When to pay your deposit timeline

• Offer accepted: No deposit paid yet.
• Conveyancing begins: Still no deposit required.
• Just before exchange: You transfer your exchange deposit to your conveyancer.
• Exchange of contracts: Your conveyancer pays the exchange deposit to the seller’s conveyancer.
• Completion day: The remaining balance is paid, and you pick up your keys.

Learn more: What is a conveyancer and what do they do?

New build purchases work differently when it comes to deposit amounts and timings. If you’re buying from a developer, it’s quite different compared to purchasing an existing property from individual sellers.

Reservation fees come first

When buying a new build, you’ll typically pay a reservation fee once your offer has been accepted – this is separate from your exchange deposit. This upfront payment, usually between £500 - £2,000, secures the property and takes it off the market while construction continues or while you arrange your finances.

Learn more about reservation fees.

Then comes the exchange deposit

After paying your reservation fee, you'll still need to pay an exchange deposit when contracts are exchanged, just like with any property purchase. New build developers typically require a 10% exchange deposit, but it may be higher depending on the developer and property price.

Different timings

With new builds, the turnaround time from offer acceptance to exchange is typically just 28 days, however the time between exchange and completion could be much longer if the property you’re purchasing is still under construction.

What happens to my reservation fee? 

Your reservation fee typically gets deducted from your final purchase price at completion, so you're not paying extra overall - just spreading the payments across a longer timeline.

First-time buyers

Buying your first home is incredibly exciting, but sourcing a deposit is becoming increasingly difficult as house prices rise. Personal savings are of course the most common source – money you’ve put aside over time specifically for buying your first home.

However, you might also receive a gifted deposit from family members, which is increasingly common, helping new buyers get their first step on the property ladder.

If you've been using government savings schemes like Help to Buy ISAs or Lifetime ISAs, these can boost your deposit with government bonuses. For gifted deposits, your mortgage lender will need a letter from the person giving the money confirming it's a genuine gift and not a loan that needs to be repaid.

Learn more: What are gifted deposits?

Existing homeowners

If you already own a property, your deposit will typically come from the equity you've built up in your current home. This is why existing homeowners often have much larger deposits available compared to first-time buyers.

For example, if you bought your current home for £200,000 with a £20,000 deposit and it's now worth £280,000 with £150,000 left on your mortgage, you'd have £130,000 in equity to use as a deposit on your next property. This explains why existing homeowners can often put down much larger deposits whilst first-time buyers sometimes struggle to get to 10%.

1. Before exchange of contracts 

If the sale falls through before you exchange contracts, you shouldn't lose any money. At this stage, you haven't actually paid your exchange deposit yet - it's still sitting in your bank account or with your solicitor ready to transfer. You'll only be out of pocket for costs like surveys, legal fees, and mortgage arrangement fees, but your deposit money remains yours.

2. After exchange of contracts

Once you've exchanged contracts and paid your exchange deposit, the situation changes dramatically. If you pull out of the sale after exchange, you'll typically lose your entire exchange deposit as compensation to the seller. If the seller pulls out, they’ll have to return the deposit in full and may face other penalties.

3. When you get it back vs when you might lose it

You'll get your deposit back if the sale falls through due to issues beyond your control - like serious issues with the property's legal title that weren't previously disclosed. You'll lose it if you decide to withdraw for personal reasons after exchange, such as changing your mind or finding a better property.

Can I use my mortgage to pay the exchange deposit?

No, you can't use your mortgage funds to pay the exchange deposit. This needs to come from your own available cash or savings, as mortgage funds aren't released until completion day.

Can I pay my exchange deposit by credit card?

No, most solicitors won't accept credit card payments for deposits due to money laundering regulations. You'll typically need to transfer the funds via bank transfer from your own account.

Do I need to pay a deposit if I'm buying with cash?

Yes, even cash buyers pay an exchange deposit when contracts are exchanged. The remainder of the purchase price is then paid on completion day, just like with mortgage purchases.