5% Deposit paid on property sale - how does this work?

I am interested in a property for sale which is being advertised by the estate agent as having a 5% deposit paid, however I am not entirely sure how this works?





Will the vendor simply knock off 5% of the property value?


or


Assuming I get a mortgage requiring a 10% deposit, will I only have to find another 5% to qualify for the mortgage?





Thanks for your help.5% Deposit paid on property sale - how does this work?
Firstly do not confuse the mortgage deposit with the purchase deposit - they are different things.





When you buy a property the seller usually expects a deposit, often 10%, on exchange of contracts. This confirms your serious intention, and will be forfeited if you then fail to complete.





When you take out a mortgage the lender will not lend 100% of the value of the property. They require you to pay some of the value out of your own pocket. Depending on the lender and the deal this ';deposit'; may be anything up to 25% or more.





You don't get your mortgage advance until completion, so the purchase deposit will also be part of your mortgage deposit.





When the seller is offering to pay your deposit they are essentially agreeing to waive your purchase deposit. The contract will say the sale price is 拢100,000 with 拢5,000 deposit paid, but you will not have to part with that money. Your mortgage lender may or may not accept this phantom 拢5,000 as part of your mortgage deposit. If not they will view the remaining 拢95,000 as being 100% of the purchase and you will need to supply the relevant deposit they require.





Either way you must not pretend that you did actually provide the 拢5,000. They will find out which may affect your chances of getting any mortgage. If they don't find out until the money is advanced they would be entitled to require the loan to be repaid in full.5% Deposit paid on property sale - how does this work?
yep basically if the house was 100k they are really selling it for 95K but allowing cash to be provided to help the situation.......
sounds like they want 5% earnest deposit with the contract.