Buying a new property on part ex

c3008212

Hi,

Background:

Myself and my partner currently have a 2 year old two bedroom townhouse which has just been valued at 110000 and we have about 3k in equity.

We are currently in the process of a part ex deal with a new 4 bed townhouse which is on the market for 177995. We rang about a mortgage with our current lender prior to starting the ball rolling and we were able to get the mortgage required to buy the property, but now our lender will only offer us 90% of what we require (nothing was offered previously, it was only an enquiry). We are in a 3 year fixed mortgage with our lender but it is transferable to a new property.

Question:
Do you think that the housing company would be willing to put down the 10% deposit we require to purchase the house, keeping the price of the house under stamp duty, offering us less for our current house? Would this have any negative impact on us for taking a hit on the sale of our house?

The salesperson at the housing company said that they are quite flexible and the price can be usually negotiated.

Any other suggestions or views would be much appreciated.

Thank you for your time.

Richard_Webster

SDLT is payable on the market valeu of a proeprty rather than the figures in the contract so if a £300K house was being PXd for a £150K house the buyer oculdn't get out of the 3% SDLT band by agreeing a PX at £250K/£100K. However, given the closeness of the asking price of the new property to the SDLT threshold a deal might reasonably be done to save SDLT. Everyone would simply say that £175K was a fair reflection of the actual value in the market at the momnet as it is pretty close to asking price. I don't think that is the issue though.

This business of the builder "paying" the 10% deposit is likely to be a problem. Builder will only do this if he can't get people to buy for £175-£177K without a gifted deposit and therefore the houses can't actually be worth that figure. Your lender will be looking at what house would sell for on the open market without these gimmicks. This could be about £160K if you take off 10% . Lender could then offer you 90% of the discounted price of that amount.

Unfortunately you I suspect you will simply have to save a real cash deposit if you want to move.

poppysarah

Can you afford a mortgage of 170k?

trinity_bleu

When we part exchanged for our house, the builder paid our stamp duty and both sets of legal fees. We then had more cash so had a lower mortgage. So they may well give you the cash for a deposit, especially if their sales have taken a hit recently.

I'd ask for everything you can - lower purchase price, stamp duty, legal fees, carpets etc. Anything to help you spend less. If they need to shift the house, they should agree to almost anything. (we got the above plus 50% more land, as the house was practically complete and unsold ... and that was 3 years ago)

Richard_Webster

I'd ask for everything you can - lower purchase price, stamp duty, legal fees, carpets etc. Anything to help you spend less. If they need to shift the house, they should agree to almost anything. (we got the above plus 50% more land, as the house was practically complete and unsold ... and that was 3 years ago)

It isn't a question of what you can get the desperate builder to give you by way of incentives, but how these are treated by your mortgage lender!