Raising deposit now for new home, not moving in until next year...

sturgeon

I'm looking to sell my flat and buy another new build, like I did 5 years ago. The difference is, when I bought this I paid a tiny reservation fee and then moved in 5 months later, exchanging and completing the same day (when I moved in).

Nowadays though, new build flats seem to sell out when they're barely even built. I've looked at some developments today, and they unanimously want a 5% deposit around 3-4 weeks after reserving.

The thing is, I have more than that 5% deposit but that's all tied up in my current home. Rather than selling up quickly and living on the streets until my new potential home is ready to move into, how do I release this equity?

I've thought about remortgaging but won't I then pay a hefty early repayment charge if I do that say now, yet move to a new place at the beginning of next year? Is there a way of releasing equity without doing that, and without there being any risk? (i.e. not some dodgy 3rd party company getting involved).

If not, I don't understand how existing homeowners can afford to move to a new build house/flat, if the developers require the deposit 6/9/12 months or more before the property is complete?!

Thrugelmir

sturgeon wrote: »

If not, I don't understand how existing homeowners can afford to move to a new build house/flat, if the developers require the deposit 6/9/12 months or more before the property is complete?!

By saving beforehand.

sturgeon

I get that if you're a first time buyer. However, if you own a home, surely you can use the equity (and that deposit that you originally put in) to help put a deposit on your next property? Obviously it works differently if you're buying a pre-owned home but there must be a way to release that equity to put a deposit on an off plan home.

kingstreet

You agree a sale on your current home and you reserve a newbuild. You exchange contracts on both at the same time. Your buyer's deposit passes up the chain, so no cash is required from you.

If you don't have a buyer for yours, you aren't going to be considered proceedable, unless you can afford to cover both mortgages. The old and the new.

You are expected to exchange contracts in 28 days, but completion is "on notice" and this may not suit your buyer who may not wish to wait. Therefore, selling your property, reserving, exchanging contracts, completing the sale and moving into rented may be a solution.

Either way, you don't get to pay a reservation fee and the builder sit and twiddle their thumbs for a few months until you get a sale. Newbuild is moving far too fast at the moment for builders to have to accept such reservations. They want 28 days exchanges and the commitment of that which allows them to fit out a property to the buyer's spec with no risk they'll pull out.

xylophone

No chance of part exchange?

sturgeon

The house builder is perfectly happy to take £500 reservation fee, then exchange within 3 months which requires the 5% deposit.

They are happy to wait until the property is finished next jan, at which point I would complete. Hence I'd only put mine on the market in say September latest, so I can exchange and my buyer completes in time for me to do the same on my new property.

sturgeon

And no they don't part exchange.

giddypenguin

All builders im aware of will not let you reserve a house until you are procedable on yours - so you have to get an offer now, and hope you can find an understanding buyer who'll exchange contracts, but wait until your new house is finished to complete.