Buying a New Build - Deposit/Mortgage help?

morleymackam

We are looking at buying a new build house that will require 10% deposit within 4 weeks of reservation. The houses are due to be finished april/may.

We are now about to put our property on the market and we are confident it will sell quickly but not quick enough to put the 10% deposit down.

Would any lenders offer a deal on a loan for this amount (£19000)? We would either incorporate it into the mortgage at a later date or pay the loan with the equity from our current property.

Do people normally sell their houses before reserving new builds? Or is there another option? All seems really difficult!

Madjock

Don't think i'd be inclined to stump up 20k to sit in the developer's pocket for 2-3 months!
Who's the developer?

morleymackam

Madjock wrote:

Don't think i'd be inclined to stump up 20k to sit in the developer's pocket for 2-3 months!
Who's the developer?

Barratt. The house is perfect so we don't want to miss out. It is in the first week or so of release.

Madjock

I'd wait for other posters who know more than me. I know new builds normally have a deadline for exchange, but I never realised people were expected to put down such a large deposit.
maybe other people here can advise on whether you can haggle. I bought from Barratt, but the house we bought was a part-ex property, and they paid our deposit. All we paid upfront was the £99 reservation fee.

I would have thought it would be more usual for your solicitor to have your deposit in their client account?

Lil_Dee_2

Be very careful, and consult your solicitor before doing anything like this. Once you have paid your deposit/exchanged contracts, within 28 days of reserving (which is not an unusual requirement for a new-build) you are legally obliged. Whether that be obliged to complete the purchase (which will probably be on the day the builder specifies, not when you're ready), or obliged to forfit the deposit because you didn't sell your house in time, depends on what happens after you exchanged.

We were lucky and had the cash to put down a deposit, but we were very nearly in real trouble, as our sale took much, much longer than anticipated. If it were not for the builders of our new house having problems too, we may well have found ourselves in real financial dire straights.

A lot of new build companies will not allow you to reserve until your property has had an offer accepted (should you be selling), and some simply won't let you reserve if your new house is dependant on the sale of your current house (George :mad: Wimpey). They're all slightly different, but one thing I can say from experience is do not make this decision lightly....make sure you are prepared to take the chance (however small it may seem) to lose the deposit and not get your new house. My solicitor was very sure about making us aware of the position we were putting ourselves in.

Be very sure of your actions. The best of luck with whatever you decide to do

morleymackam

Lil_Dee wrote:

Be very careful, and consult your solicitor before doing anything like this. Once you have paid your deposit/exchanged contracts, within 28 days of reserving (which is not an unusual requirement for a new-build) you are legally obliged. Whether that be obliged to complete the purchase (which will probably be on the day the builder specifies, not when you're ready), or obliged to forfit the deposit because you didn't sell your house in time, depends on what happens after you exchanged.

We were lucky and had the cash to put down a deposit, but we were very nearly in real trouble, as our sale took much, much longer than anticipated. If it were not for the builders of our new house having problems too, we may well have found ourselves in real financial dire straights.

A lot of new build companies will not allow you to reserve until your property has had an offer accepted (should you be selling), and some simply won't let you reserve if your new house is dependant on the sale of your current house (George :mad: Wimpey). They're all slightly different, but one thing I can say from experience is do not make this decision lightly....make sure you are prepared to take the chance (however small it may seem) to lose the deposit and not get your new house. My solicitor was very sure about making us aware of the position we were putting ourselves in.

Be very sure of your actions. The best of luck with whatever you decide to do

Thanks for the advice. We realise just how much of a gamble it is but the New home builders put you in such a difficult position. The house is perfect in every way and we have been looking for some time. If worst came to worst I guess we could look at a bridging loan? Our house will definitely sell it's just the time scale of getting it all through! We may have a large fee to pay but it's better than losing a £20k deposit!

dunstonh

Our house was a Bovis new build and only a £250 deposit was required.

Asking for 10% up front like that seems a bit heavy.

virgo149

When we bought our new build in 2001 (Wesbury) we paid a £6K deposit- not sure what percentage this was, I think they just thought of a number!

We enquired recently about another new build (Wimpey) and I questioned this 10% deposit as all our money is tied up in the house. They were prepared to 'negotiate' on this amount as long as we put something down (the rest being payable if we pulled out).

I think the best thing you can do is get to know the sales persons very well and have a good chat about it. You might be able to negotiate as well.

But DO NOT do what someone we know has done recently (actually the vendors of the house we were going to buy). They exchanged and completed under pressure from the developer a week before we lost our buyer 2 days before exchange and had to pull out of the sale.

It is worth it but be prepared for a lot of pressure from the builders at all stages - it can get quite stressful at times.