Selling house > buying new build. Confusion about deposit

aaryal

Hello all,

I am a homeowner who wants to sell his existing home to help fund the purchase of a Bellway new build house.
A few questions if I could kindly have your help on.

1. My current debt: £130K. Estimated value of house: £330K, so that means I have £200K "in equity/cash", correct?
2. New house is £400K. If I want to put the entire equity into the new house, does that mean therefore that my deposit is £200K out of £400K = 50%?
3. I need to basically sell my house to release the money. Bellway tell me that I need to put a £1K reservation, and then "exchange" in 28 days. What does this mean? Does it mean I need to release the entire 50% (i.e. 200k) within the 28 day timeframe? 
4. My only challenge with that is that it sounds so UNREALISTIC that I find a potential buyer on my current home and that I get the sale done all within 28 days in order to release the £200K which I will use as deposit for the new house
   
5. Am I able to say for example that I want to put a 50% deposit down, and only pay 10% deposit during the 28 days, and then pay the rest/40% deposit during completion when the house is ready next year?

Surely it can't be as tricky as this? What is missing in my understanding?

krusty101

They say 28 days but we reserved a Bellway house in September and exchanged in March. House wasn’t quite finished and they were relaxed about the delays in the sale of ours. 

MaryNB

There are two deposits.

The exchange deposit - 10% at exchange

The mortgage deposit - 50%,  10% at exchange (as above), the remaining 40% you pay at completion

krusty101

To clarify, I mean we got an offer within a week of it going on the market. That seems to be the bit they were most interested in, in our case anyway.  

Slithery

Is the new house ready to move into yet?
If not then you may have trouble finding a buyer who's willing to go along with the developers timescales.

aaryal

Hello all. Thanks for the quick responses.

The house is ready in summer 2022. So basically about 9 months left till the house is ready.

So have I understood the order of things correctly?

• I tell Bellway that I am selling my current house to fund the new house
• I tell them that I am depositing 50%, 10% within 28 days, and then the remaining 40% when the house is ready in 2022. The remaining 50% is my mortgage
• I put my house on sale and find a buyer. They make an offer
• When we get to the 28 days, do I need to find the 10% separately, or will the solicitor do the "exchange" and somehow release 10% to pay off

Basically, at any point do I need to get cash ready on the side? Or will my existing house "pay off" the entire process?

Slithery

Have you asked the developer if they will do a part-exchange for your current property? It would make things much easier.

MaryNB

You'll exchange on your sale and purchase on the same day. At exchange your buyer will give you 10% of their purchase (say £33k) and then gets passed up the chain to the developer. Either the developer accepts that you'll have a lower % deposit because of this or if they don't you have to add £7k to it from savings to make up the 10% (£40k). 

28 days isn't a lot of time to exchange on an existing property. Searches often take longer than this. If they want a homebuyers survey it could take a few weeks to get some one out. And what happens if it takes a few weeks to find a buyer.

MidnightWolf

Is there any chance you can use their express mover scheme (for them to help sell your house) or even part exchange. We part exchanged our old house for a Bellway new build two years ago and that way we didn’t have to worry about any deposits. They even paid us a good price on our old house (also leaving us with exactly £200k equity), more than they actually sold it on for. Obviously, what schemes they offer does depend on the popularity of the development and I guess at the moment demand may be high.

eddddy

aaryal said:

Hello all. Thanks for the quick responses.

The house is ready in summer 2022. So basically about 9 months left till the house is ready.

So have I understood the order of things correctly?

• I tell Bellway that I am selling my current house to fund the new house
• I tell them that I am depositing 50%, 10% within 28 days, and then the remaining 40% when the house is ready in 2022. The remaining 50% is my mortgage
• I put my house on sale and find a buyer. They make an offer
• When we get to the 28 days, do I need to find the 10% separately, or will the solicitor do the "exchange" and somehow release 10% to pay off

Basically, at any point do I need to get cash ready on the side? Or will my existing house "pay off" the entire process?

If your current house isn't even on the market yet, you're getting way ahead of yourself.  

The house buying process is more complex, if you're buying a newbuild. The ideal sequence will need to be something like this:

• Put your house on the market
• Find a buyer who is prepared to exchange contracts within 28 days, and complete in summer 2022 (which might be difficult)
• Then reserve your Bellway house using £1k
• Exchange contracts on your sale and purchase after 28 days
• Your buyer will pay you a 10% (£33k) deposit on exchange. You'll add £7k from your savings to make it up to the £40k deposit that Bellway want
• In summer 2022 you'll complete using £200k from your mortgage lender and £160k from the sale of your old house (plus the £40k deposit you'll already have paid)

The big challenge will be finding a buyer for your house who's happy to work to that timescale.

aaryal

eddddy said:

aaryal said:

Hello all. Thanks for the quick responses.

The house is ready in summer 2022. So basically about 9 months left till the house is ready.

So have I understood the order of things correctly?

• I tell Bellway that I am selling my current house to fund the new house
• I tell them that I am depositing 50%, 10% within 28 days, and then the remaining 40% when the house is ready in 2022. The remaining 50% is my mortgage
• I put my house on sale and find a buyer. They make an offer
• When we get to the 28 days, do I need to find the 10% separately, or will the solicitor do the "exchange" and somehow release 10% to pay off

Basically, at any point do I need to get cash ready on the side? Or will my existing house "pay off" the entire process?

If your current house isn't even on the market yet, you're getting way ahead of yourself.  

The house buying process is more complex, if you're buying a newbuild. The ideal sequence will need to be something like this:

• Put your house on the market
• Find a buyer who is prepared to exchange contracts within 28 days, and complete in summer 2022 (which might be difficult)
• Then reserve your Bellway house using £1k
• Exchange contracts on your sale and purchase after 28 days
• Your buyer will pay you a 10% (£33k) deposit on exchange. You'll add £7k from your savings to make it up to the £40k deposit that Bellway want
• In summer 2022 you'll complete using £200k from your mortgage lender and £160k from the sale of your old house (plus the £40k deposit you'll already have paid)

The big challenge will be finding a buyer for your house who's happy to work to that timescale.

This is clear, thank you. 
Do the developers tend to go easy if they know the process is plugging along? I.e. we get to 28 days but the person buying my house needs another 2 months before they're ready to exchange. How easy is it to get the developer to "c'mon just give it another 2 months.. you can see the process is happening"..

Is it just easier if I do part-exchange and sell the house to Bellway? Will I get ripped off with the price? Anyone have any experience "selling to BEllway" instead of finding a buyer?