Buying a New Build when you have a house to sell

kitty_kins

Hi all
We are considering moving home to a New Build development that is popping up nearby.
We bought the home we are in as a new build, but I'm a bit confused about the process when we have a property to sell also.
As I understand it we have to:
- Pay a reservation fee on the plot
- Pay an approx. 10% deposit on exchange of contracts 28 days later
- Pay the balance on completion

What's throwing me is the deposit on exchange. We have equity in our house that will cover it, but obviously we can't access that until completion (which is at least 12 months away at the moment, the sales office hasn't even opened yet). 

So where exactly are we meant to get the money from? 

In theory, all our figures work out, but it's the timeline of payments that is throwing me. This would be the first time we would be selling a house, so it's a bit more complicated this time round! 

Thanks in advance

ThriftyGinger

My vendors are buying a new-build: they might say you'll exchange after 28 days in the paperwork but it's been four months and we've not exchanged yet.

AdrianC

You have two choices, if you can't raise that 10% any other way (perhaps remortgaging with a portable mortgage?).

1. You sell your property to somebody who is also happy to exchange waaaaaaaaay before completion. Their deposit passes up the chain.
2. You PX your property with the developer.
3. You sell your property normally, and move into rented.
4. You wait until the new-builds are nearer completion, rather than buy off-plan.

Holding back from the requested 28 day completion risks the developer selling the plot to somebody else. For a short delay, it's possible. If you aim to hold back all the way to the new-build being released, you are pushing your luck.

kitty_kins

Thanks both
I was thinking that I could probably just about work it with savings if we used our buyers deposit towards it, but hadn’t considered that it would mean them having to exchange was earlier than would be reasonable!
I will look into the part exchange option when we come to it - I was hoping to negotiate stamp duty paid on the house, but I don’t think I’ll manage both! Never mind. 

Thanks again for your advice. 

RelievedSheff

kitty_kins said:

Thanks both
I was thinking that I could probably just about work it with savings if we used our buyers deposit towards it, but hadn’t considered that it would mean them having to exchange was earlier than would be reasonable!
I will look into the part exchange option when we come to it - I was hoping to negotiate stamp duty paid on the house, but I don’t think I’ll manage both! Never mind. 

Thanks again for your advice. 

We part exchanged our old property against a new build last year. We got an excellent price for the part exchange, £10k deposit contribution, stamp duty paid, legal fees paid, moving costs contribution and free flooring throughout. On top of this we saved on estate agents fees and had a guaranteed buyer for our house. We were very happy with the deal. The house we bought was also already heavily discounted against previous sales prices for the same house type.

You can get some good deals even if you part exchange. This was on a completed property though that they wanted off their books. From reservation to completion and moving in was 3.5 weeks.

isplumm

We also part exchanged when we bought a new build a few years back - this was with Bloor - I found it a fairly easy process - I thought the price we got was pretty good - so I would get your property valued from estate agents & then speak to the new build company about part exchange - see what they say.

kitty_kins

RelievedSheff said:

kitty_kins said:

Thanks both
I was thinking that I could probably just about work it with savings if we used our buyers deposit towards it, but hadn’t considered that it would mean them having to exchange was earlier than would be reasonable!
I will look into the part exchange option when we come to it - I was hoping to negotiate stamp duty paid on the house, but I don’t think I’ll manage both! Never mind. 

Thanks again for your advice. 

We part exchanged our old property against a new build last year. We got an excellent price for the part exchange, £10k deposit contribution, stamp duty paid, legal fees paid, moving costs contribution and free flooring throughout. On top of this we saved on estate agents fees and had a guaranteed buyer for our house. We were very happy with the deal. The house we bought was also already heavily discounted against previous sales prices for the same house type.

You can get some good deals even if you part exchange. This was on a completed property though that they wanted off their books. From reservation to completion and moving in was 3.5 weeks.

Oh that’s really interesting!

I’d assumed that they would think they were doing us enough of a favour by part exchanging, but I’ll definitely push for stamp duty paid and see where that gets me. It would free up more money for extras and I know from buying our current house that that’s where they make a lot of their money so you never know! 

Thank you!