New build - increasing deposit after exchange?

Ithilien

We're looking to buy a new build, currently on waiting list. This will be off plan.

Bit of background: We're first time buyers, both good credit scores. Deposit will be minimum 21% (depending on when plot is released + how much it will actually cost). I don't know if it's relevant but about 70% of the deposit is gifted from abroad.

Timescales are as follows:
- Reservation of plot
- Exchange of contracts within 28 days; deposit is required at that point.
- Completion 6-9 months later

In the 6-9 months between Exchange and Completion we'll be able to save another £10K or so. Is it possible to add this to our already transferred deposit before or on completion?

SavingSteve

You wouldn't pay more to the developer at that point. You just borrow the lower amount, then on completion send the money to your solicitor and they'll combine with the mortgage advance and send on to the seller.

csgohan4

SavingSteve wrote: »

You wouldn't pay more to the developer at that point. You just borrow the lower amount, then on completion send the money to your solicitor and they'll combine with the mortgage advance and send on to the seller.

Wouldn't changing the LTV after exchange mean needing a new mortgage application prior to completion?


Unless your only lowering the amount you borrow from others abroad, then that would not affect the mortgage amount.

mark55man

Depending on what your mortgage rate is and how long (if any) it is fixed for, you might be better off putting it into a matched duration savings account. You can get some good rates on that sort of sum.

Alternatively you could overpay once you have started which is much the same.

If you have a bigger deposit, though you should be able to get a more attractive mortgage offer if you cross the 75 or 60% LTV mark

I assume you do that at completion, so I think that would a dicussion with your broker at that point

kingstreet

Having the mortgage amount reduced between exchange and completion shouldn't be an issue.

Gifts from overseas are a problem for some lenders and solicitors, even more so for certain countries.

Position this issue as early as possible with the relevant parties.

Ithilien

Gift comes from Western European EU country, so that should hopefully be okay. I also still have bank account there so my dad is transferring the money to that account after which I'll move it to my UK account. Also this money is not borrowed; I'm not going to pay it back at any point.

I guess we'll talk to the broker. Alternatively we might use it to pay for options (more expensive kitchen etc.).

Thanks all!

PasturesNew

The word deposit is the same word used for two separate events in buying a house:
- deposit(1): what you give to the developer/seller.
- deposit(2): what you are putting into the property price, making your mortgage smaller.

You put down your deposit(1) with the developer.
You save more deposit(2).
You borrow less from the lender.

The 'problem' you have is assuming the two uses of the single word are the same event.

Ithilien

Thanks PasturesNew.

In that case, for (1) on Exchange I should be able to just give them the minimum required (i.e. 10% of purchase price), and on completion give (2) with full amount (i.e. what I already had + what we've saved up between exchange and completion)?

If that's the case I'd wait with getting the full gift transferred over whilst GBP vs EUR is still dropping.