Part ex advice for new builds

michelleb1989

I just would like some advice on part exchange for new builds. We bought our current house for 185,599(I think), 3 years ago with help to buy, we got approx 30,000 from them and we put 9000 deposit down and the builder gave us 9000 too ( all approx numbers as I dont have all the documents in front of me). The new house we would like to buy is 305,000 is there anyone here who can advise me on how part exchange works, do we need to provide another deposit? Do we pay solicitor fees again? Do we have to pay stamp duty ? We are in the very early days and obviously wont be doing anything until it is safe to do so with covid 19.

Thank you!

Carl2510

Yes yes and yes,

you would have to pay stamp duty again, yes you would need to pay solicitor fees as you do with every house purchase unless it’s a cash buyer I guess. And yes you would also need a deposit but depending on the value of yours if you have equity you could use that. 

AdrianC

Yes, you pay stamp duty on the purchase of any property, no matter how the deal is structured. On a £305k purchase, it'll be £5,250

Yes, you're going to need to pay a solicitor. They don't work for a sense of helping humanity... And do NOT go with the developer's "recommendation". The solicitor is the ONLY person working for you.

Do you need "a deposit"...? Well, in a chain, the security deposit tends to get passed up from the FTB at the bottom. But I suspect you're thinking of the cash equity you put in? That's your current house's equity (sale price minus outstanding mortgage)...

Carl2510

AdrianC said:

Yes, you pay stamp duty on the purchase of any property, no matter how the deal is structured. On a £305k purchase, it'll be £5,250

Yes, you're going to need to pay a solicitor. They don't work for a sense of helping humanity... And do NOT go with the developer's "recommendation". The solicitor is the ONLY person working for you.

Do you need "a deposit"...? Well, in a chain, the security deposit tends to get passed up from the FTB at the bottom. But I suspect you're thinking of the cash equity you put in? That's your current house's equity (sale price minus outstanding mortgage)...

Would you always go against using there solicitor? What about there mortgage broker? You’d think it would speed the whole process up?

Slithery

Yes, always. It may speed things up, but only by the solicitor not doing a proper job.
After all, they're meant to be the only people on your side in the transaction. Do you really think that a solicitor who gets thousands of customers a year from a developer is going to rock the boat with them by pointing out to you anything negative?

petec22

We are in the process of buying a new build and have used their recommended solicitors and mortgage brokers, both have been absolutely brilliant much better than the local solicitor we have dealing with the sale of our current property 

davidmcn

Carl2510 said:

AdrianC said:

Yes, you pay stamp duty on the purchase of any property, no matter how the deal is structured. On a £305k purchase, it'll be £5,250

Yes, you're going to need to pay a solicitor. They don't work for a sense of helping humanity... And do NOT go with the developer's "recommendation". The solicitor is the ONLY person working for you.

Do you need "a deposit"...? Well, in a chain, the security deposit tends to get passed up from the FTB at the bottom. But I suspect you're thinking of the cash equity you put in? That's your current house's equity (sale price minus outstanding mortgage)...

Would you always go against using their solicitor? What about their mortgage broker? You’d think it would speed the whole process up?

Yes, it might speed things up by ensuring you don't get told anything you'd want to be told. Have a look at umpteen threads here by people who regretted using the developer's "tame" solicitors.

davidmcn

petec22 said:

We are in the process of buying a new build and have used their recommended solicitors and mortgage brokers, both have been absolutely brilliant much better than the local solicitor we have dealing with the sale of our current property 

Often you don't find out until much later (e.g. when you come to sell) how good the solicitor who dealt with your purchase actually was.

RelievedSheff

We used part exchange to buy our new build this time last year.

The equity in the house we part exchanged against the new one was used as the deposit on the new build.

One word of warning do not expect them to offer you full market value for your current home because they won't. They offer you a price that they could sell your house for within 6 weeks so it is less than open market value. We got 90% of the open market value for our old house. But the difference was made up in builder incentives as we got £10k deposit contribution, stamp duty paid, legal fees paid, moving costs contribution and free flooring throughout plus we didn't have estate agents fees and the deal allowed us to move into the property less than four weeks after we reserved it. So overall we were only a few grand down on what we could have sold the house for but without the hassle of a private sale.

As it happens they sold our house on again while we were still in it. It went on the market Friday afternoon and was under offer by Monday morning So they got a swift sale as well.

We used our own mortgage broker but did use a developer recommended solicitor who was local to us. We had a choice of three different firms to use. The ones we chose were brilliant and couldn't have made the transaction any easier but we are on a Freehold site with no management charges or leases to complicate matters. It was a very straightforward sale and purchase.