Deposits on new build

briggers19861986

Hi everyone

Looking to purchase a new build with deposit of £11,500.

I have a shared ownership property to sell which I will end up with £29,000 equity.

I wanted to use part of the £29k for the deposit on the new build which I understand I wouldn't get the funds until completion on my sale.

Although the buyer of my house would put down a deposit which can be used towards my new house deposit, as this is shared owndership it would only be £3,600 so short of £8,400. Money I just don't have at the ready.

The developer is asking for the £11,500 on exchange....is there any way I can get round this? Would the developer negotiate?

Would I be able to prove via solicitor, the housing association my current house is with and by showing my mortgage in principle that I have the funds in equity and also everything set up ready to go.

Would it make any difference?

Thanks

JBP

gingercordial

What was wrong with your previous thread on this earlier today?

https://forums.moneysavingexpert.com/discussion/5622495

alex_163163

It shouldn't be a problem really. Most people buying and selling in a chain are using equity to fund the next house, so it's commonplace.
Your solicitor will negotiate with theirs, and often the deposit moving up the chain will be sufficient as long as the purchase is seen to be progressing well from your side. That how it's been explained to me in the past anyway.

alex_163163

Don't worry about the deposit side of things like you are. It's not a problem, really.

If you want the house and can afford and get a mortgage, go try to reserve it.
Have you actually accepted an offer on yours? You will need to have an accepted offer before a developer will let you reserve.

Do you have some other money set by for the initial solicitor fees? You'll likely need to pay a couple hundred pounds up front for the searches.
The rest will be payable at the end when you complete on the purchase, and will come from the equity if that is where you have budgeted the fees to come from. Or if you have some saved separately you will then pay that to the solicitor at the end.
Your solicitor will negotiate on the amount of deposit, as I said above.

If you can afford it, and its deffo the right house for you, just go for it! The deposit on exchange will not be a problem!

briggers19861986

All very new to this, only signed up yesterday and couldn't seem to find my first post!! lol

Thank you all for your informative help

Greatly appreciated and you have put my mind at rest

neilio

alex_163163 wrote: »

You will need to have an accepted offer before a developer will let you reserve.

This is not strictly true. Perhaps it depends on the developer, but I was able to reserve and exchange on a new build (which was off plan at the time) without having a buyer. I was honest and upfront with them that, ultimately, the sale of my property would finance the purchase of the house.

I also had to come up with the deposit funds for exchange. Have you spoken to a mortgage advisor about remortgaging your shared ownership home to release some of the equity right now? If you do this, then you can use the money for the deposit. Then, when you sell the property, it will pay off the remortgage. There will no doubt be an early repayment charge on this because the remortgage will have a fixed term, so that will need to be factored in.

It sounds a bit risky, but it's what I did last year. I remortgaged my flat, used the released funds to pay the deposit on the house and exchanged contracts, before my flat was even on the market. I had eight months to sell and it sold.

kingstreet

neilio wrote: »

This is not strictly true. Perhaps it depends on the developer, but I was able to reserve and exchange on a new build (which was off plan at the time) without having a buyer. I was honest and upfront with them that, ultimately, the sale of my property would finance the purchase of the house.

I am very surprised your solicitor permitted exchange of contracts under such circumstances, let alone the developer accepting a reservation.

Did you set it up as a let to buy which would make you non-dependent, then sell instead?

neilio

kingstreet wrote: »

I am very surprised your solicitor permitted exchange of contracts under such circumstances, let alone the developer accepting a reservation.

Did you set it up as a let to buy which would make you non-dependent, then sell instead?

No not at all. In fact I was under the impression that I had to sell my property in order to finance the deposit at first. But it was when I spoke to my mortgage advisor who suggested the remortgage as if it was normal and something that people generally do. I told the developer this, and they agreed that it seemed pretty normal. And likewise, my solicitor was also okay with it.

kingstreet

It sounds like a let to buy.

You remortgage current property onto a product for letting and raise the deposit for the purchase at the same time.

If you don't plan to sell the current property you aren't considered as dependent on the sale by the builder.

However, as you have found you have an ERC to pay when you then sell earlier as there are no products for letting without ERCs.