Urgent help please!

rothers798

Could anyone tell me the answer to the following......

I have sold my house for £190,000 and put a reservation on a new build for £196,000. The new build will not be ready until May/June 2008 but my buyer needs to move asap and in anycase I need to exchange in about 4 weeks. I am happy to rent from completion in relation to my property now until I complete on my new house.

My question is in relation to my mortgage, exchange of contracts and deposits. Obviously I do not need my full mortgage until I complete on my new house but would I need one to cover my deposit and would I need to have my mortgage in place asap. The builder is paying my 5% deposit. Would I need a further 10% deposit or just the remainder 5%?

If I could get the cash together for the deposit on mine could I put off getting the mortgage until I complete on the new property?

I'm confused as you can tell!! I just hope I haven't confused everybody else!!! Lol!

Any advice would be appreciated!

zekepes

I don't think I really undertand?!

If the builder is paying the 5% and you have already paid your reservation fee then your new mortgage won't be needed until you are about to move into the new place, surely?

Your current mortgage will be paid with the house sale and any remaining equity will be yours to look after until you need it to pay for the new house, along with your new mortgage.

I don't understand the 10% thing. Do you mean that you will have a 90% mortgage or that the house builder wants more money to reserve the plot for you?

rothers798

It says in the booklets that they have given me, that at exchange of contracts a 10% deposit is required. That is without any mention of a 5% deposit paid incentive.

Thanks

Sammy85_2

This is all very confusing.


As your booklet states: 10% required upon completion. If they are offering 5% deposit paid then YOU need to find the other 5% (if you have a 90% mortgage.) Im afraid mortgages dont pay deposits.

The only way your mortgage would pay the remainder of the 10% deposit is if you took out a 95% mortgage, (then its not a deposit anymore and you only have a 5% deposit which the builder is paying) but i dont see how you would if your booklet categorically states that a 10% deposit is required.

In any case, payment is due on exchange of contracts.

The only thing you would need to pay upfront would possibly be a reservation fee to the builder for the plot and the arrangement and legal fees.

I think you need to clarify some things to get an answer on this one.
How much of a % mortgage are you taking out?
What exactly have you paid already?

rothers798

Thanks for your time...

I have paid £500 reservation fee. The builder's booklet states that a 10% deposit is required on exchange. Part of the deal is that the builder pays 5% deposit. I need a mortgage of £108000 on the house valued at £196000.

Thanks

silvercar

You receive a deposit from your buyer that passes up the chain to act as your deposit on your new house. This all happens on exchange, which should be on the same day for your sale and purchase. If the builders are paying 5% of your purchase, then you should only have to find 5%.

Your buyers may only offer you 5% deposit -this is becoming more common. SO you receive 5% of £190k and you need to pass on 5% of 196k. So you may have to find 5% of 6k ie £300, but this will probably be from your reservation fee.

Your solicitor should sort all this out for you.

Doozergirl

I can't believe you paid full asking for a new build

zekepes

rothers798 wrote: »

Thanks for your time...

I have paid £500 reservation fee. The builder's booklet states that a 10% deposit is required on exchange. Part of the deal is that the builder pays 5% deposit. I need a mortgage of £108000 on the house valued at £196000.

Thanks

So the builder is putting in his 5% - £9800

On exchange of contracts they require an additional £9800 from you.

Surely you will have at least that from the sale of your home in 4 weeks time? You must have £98,200 in equity or cash to only require a £108K mortgage on this property as you are only getting a 55% mortgage.

OH! I *think* I get it. You will be exhanging on your new property in 4 weeks time but you won't have sold your own home by then (and therefore not released the equity). Umm not sure about this - I would ask you solicitor. Seems really early to be exhanging on a property that won't be ready until May!

I bought a new property, once, about 12 years ago where the builder (barratt homes) paid the 5% - we certainly didn't need to give them anymore until contracts had been exchanged and we moved in (beyond our initial small reservation fee).

Sammy85_2

Ok,

So the 10% deposit is £19600 total, of which the builder is paying 5%. This means you need to pay the other £9800 yourself.
(the only way to pay this deposit through the mortgage would be to up the mortgaged amount by 9800, effectively it then covers it, although on paper you would still be paying deposit from your cash)


House price = 196000

5% Deposit from builder = 9800
5% Deposit from you = 9800
mortgage amount = 108000
Total : 127600

Remaining to pay by you= 68400 (i assume cash from previous house sale)

So the total money you need to come up with is £78200

You shouldnt need to pay anything until exchange of contracts since you've already paid reservation fee.

Hope thats of some help.

zekepes

silvercar wrote: »

You receive a deposit from your buyer that passes up the chain to act as your deposit on your new house. This all happens on exchange, which should be on the same day for your sale and purchase. If the builders are paying 5% of your purchase, then you should only have to find 5%.

Your buyers may only offer you 5% deposit -this is becoming more common. SO you receive 5% of £190k and you need to pass on 5% of 196k. So you may have to find 5% of 6k ie £300, but this will probably be from your reservation fee.

Your solicitor should sort all this out for you.

ok - this is making more sense!

I have only ever completed and exchanged on the same day so I have escaped all of this - hence my ignorance!

rothers798

Doozergirl, Price was £196000, we got 5% deposit paid (9800),1% stamp duty paid and upgrades worth about £4000.I honestly don't think that we could have got any more and we love the house and area. IMHO it was worth it, we don't plan on moving for many years, if ever!

Thanks to everyone for their replies.