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New build conveyancing..
scrunter
Posts: 1 Newbie
Hi,
We're currently reserved on a new build property plot, bit of an impulse but we really liked the design and location and hadn't planned on it, which is due for completion early summer, with our current house (and deposit equity) on the market and the option to move in with relatives should our sale go through earlier (we are no forward chain to hopefully help).
We're now coming under some pressure to exchange contracts in the next month from the developer, which includes a 10% deposit (20K+). Our current sale isn't moving as quickly as we had hoped, we're hoping its January blues or the agent put it up overpriced (or a bit of both), either way we had hoped for more interest and some better indicators on eventual price we'll get. We also hadn't fully realised the difference in the conveyancing methods for new build until researching it further after being chased by the developer a few days ago - we're only just at the point of appointing solicitors etc.
Without a confirmed offer on our current property (this is its first time in the market from occupied), its difficult to know what numbers to talk about with lenders, until we get a sense of what we'll actually get for it, however we still need to sort out the 10% deposit and work towards exchanging contracts - but that's committing to something and more serious expenditure without a clean exit route in my head. I.e. if our sale goes wrong / doesn't happen, can the developer and lender go to town on you and expect full payment / drawdown ?
As it stands I think to proceed we'd either need to draw down on a new mortgage early for the deposit if that's even possible, or withdraw equity for the deposit via the existing mortgage (with the potential to later port it), or look at bridging or some other mechanism. We can cope with additional monthly expenditure to cover the gap, but obviously not for ever.
Does anyone know what normally happens in these circumstances ? Are lenders open to early partial drawdown for new build deposits, does such an option even exist ? Or are we looking at specialist products (and rates) ? What are the risks ?
The obvious risks I can think of, are that should we take out an additional mortgage, and exchange, aren't we're then contractually obligated and money down well before the build is completed, and without the normal safety you'd get from exchanging and completion in a normal house sale - it certainly feels stacked a little against us - but I get they have risks too.
Option B: Walk away - reservation fee refunded - if we're quick - which we can cope with if its the most sensible route. Our current house purchase by comparison (also new build) was clean, efficient with zero pressure, but took a more conventional route - it was almost built when we put in our offer, so standard conveyancing worked, and no early deposit was required.
Any advice gratefully received.
S
We're currently reserved on a new build property plot, bit of an impulse but we really liked the design and location and hadn't planned on it, which is due for completion early summer, with our current house (and deposit equity) on the market and the option to move in with relatives should our sale go through earlier (we are no forward chain to hopefully help).
We're now coming under some pressure to exchange contracts in the next month from the developer, which includes a 10% deposit (20K+). Our current sale isn't moving as quickly as we had hoped, we're hoping its January blues or the agent put it up overpriced (or a bit of both), either way we had hoped for more interest and some better indicators on eventual price we'll get. We also hadn't fully realised the difference in the conveyancing methods for new build until researching it further after being chased by the developer a few days ago - we're only just at the point of appointing solicitors etc.
Without a confirmed offer on our current property (this is its first time in the market from occupied), its difficult to know what numbers to talk about with lenders, until we get a sense of what we'll actually get for it, however we still need to sort out the 10% deposit and work towards exchanging contracts - but that's committing to something and more serious expenditure without a clean exit route in my head. I.e. if our sale goes wrong / doesn't happen, can the developer and lender go to town on you and expect full payment / drawdown ?
As it stands I think to proceed we'd either need to draw down on a new mortgage early for the deposit if that's even possible, or withdraw equity for the deposit via the existing mortgage (with the potential to later port it), or look at bridging or some other mechanism. We can cope with additional monthly expenditure to cover the gap, but obviously not for ever.
Does anyone know what normally happens in these circumstances ? Are lenders open to early partial drawdown for new build deposits, does such an option even exist ? Or are we looking at specialist products (and rates) ? What are the risks ?
The obvious risks I can think of, are that should we take out an additional mortgage, and exchange, aren't we're then contractually obligated and money down well before the build is completed, and without the normal safety you'd get from exchanging and completion in a normal house sale - it certainly feels stacked a little against us - but I get they have risks too.
Option B: Walk away - reservation fee refunded - if we're quick - which we can cope with if its the most sensible route. Our current house purchase by comparison (also new build) was clean, efficient with zero pressure, but took a more conventional route - it was almost built when we put in our offer, so standard conveyancing worked, and no early deposit was required.
Any advice gratefully received.
S
0
Comments
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It is usually unwise to offer on a house when you haven't got an offer on your own place. You said so yourself you hadn't planned on it.
I would consider getting a broker to see if you can get a separate mortgage depending if you have a large enough deposit.
bridging loan is very expensive and may become an issue if you wait too long as the interest racks up while waiting for a buyer."It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
Do your developers offer a part exchange service? You'd take a hit on the value but it may sort the issue.0
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Absolutely. If you exchange contracts, you are legally committed to buying the new house once it's ready, regardless of progress of your sale. Unless you are genuinely willing and able to finance ownership of both houses for an indeterminate period of time, DO NOT EXCHANGE on this purchase without having first exchanged on your sale.Without a confirmed offer on our current property (this is its first time in the market from occupied), its difficult to know what numbers to talk about with lenders, until we get a sense of what we'll actually get for it, however we still need to sort out the 10% deposit and work towards exchanging contracts - but that's committing to something and more serious expenditure without a clean exit route in my head. I.e. if our sale goes wrong / doesn't happen, can the developer and lender go to town on you and expect full payment / drawdown ?0
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