Purchasing a new build house - Paying deposit

mattscall

I am currently looking into buying a new build house on a development which the initial phase is due for completion in June 19'. I currently have a mortgage on a property and after a recent valuation we have calculated that we would have approx. £80-90k in equity to use as a deposit if we decided to move.

My question is regarding the process for paying the deposit for the new build property on exchange of contracts; I have read that this can be anything from 10-30% of the purchase price which would mean anything between £25k-£75k. As our deposit is tied up in the equity in our current property I don't know how this would work as we don't have the liquid funds to cover this.

The only way I can see this working is if we were to sell our property now and renting but that would be costly and without confirmation of a date for completion I would not want to do this.

Does anyone have any experience or advice on this please?

Thanks

Matt

kingstreet

Your buyer's deposit will pass up the chain.

Your solicitor will agree with the builder's solicitor this would be sufficient as your funds are tied up in your property until completion.

davidmcn

On the other hand, the vague date of completion makes forming a chain more tricky, as your buyers are unlikely to want to be dragged along by the vagaries of your builders' timescales. So selling first sometimes makes more sense.

If you're already talking to the developers, haven't you found out what amount of deposit they want? Also don't get confused between the contractual deposit, and "deposit" in the sense of the equity you're putting into the price (i.e. the portion which isn't your mortgage) - you don't need the latter until completion.

mattscall

Thanks for the replies

I've asked them what this is likely to be but they have not actually released any details of the prices for the site yet so unable to confirm.

My other thought was to look at borrowing the money for the contractual deposit and then repaying this once we complete; would mortgage lenders look unfavourably at this when applying for a new mortgage

We would also consider going down the part ex. route; would this negate then need to pay a deposit or would this still be payable regardless?

Thanks

comeandgo

Any experience or advice? Sell your property now, and go into rented. New builds are notorious for going past the original move in date, can you risk your buyers pulling out at the last minute due to date changes?