Deposit for buying a new build

Longford

Hi all,

We're interested in buying a new build and the deposit is 10% (£68,000) and we only have half that amount in savings.

What is the best way to finance the 68k in order to exchange? 

Here are the options I've come up with:

1. sell home & rent / air BnB for a few months until completion

2. remorgage to release equity (not sure what exit fee is) and then get a new mortgage for new house

3. bridge loan / mortgage

Is there anything else?

The builder does not do part-exchange.

I'm confident our current home would sell for at least 475k and we could secure the mortgage we need to complete on the new property.  Our equity is 380k.

Thanks in advance.

James

K_S

@longford Given that the shortfall is only 34k, and you're probably high earners given that you're buying a 680k property, you could perhaps consider taking out a personal loan or two?

Alternatively, you could also consider a further-advance/additional-borrowing from your current lender on your current home. So no need to do a full remortgage or incur an exit-penalty.

If the above two are not feasible, then a second-charge loan on your current home might be a more expensive option to consider.

Which of the above is available to you, best suited to your requirements and most cost-effective will depend on the details.

I'm sure there might be other options available as well, these are the more straightforward ones I can think of off of the top of my head.

DCFC79

Number 1 is risky, the completion for the build could be delayed which means you have to extend your airbnb stay, might not even be delayed and you will be fine.

Probi

We are currently in the process of purchasing a new build and have sold our existing property to do so, the 10% figure is up for negotiation, we are only planning on putting down 10% of our sale price as that's all we have, the 10% from our sale will just be passed up the chain as it would in most house purchases within a chain.

It has been a bit more of a pain with our solicitor having to push back quite a lot but the developer seem to eventually give in.
The challenge you are likely to have is to find a buyer who is happy to exchange quickly and then wait for the new build to be ready, we had our original buyer pull out over this and when we listed the second time we ensured that anybody coming to view our property were fully aware of the circumstances.

kingstreet

Won't your solicitor put to the developer's solicitor your buyer's deposit as the amount required at exchange as presumably the remainder is coming from equity in your current home?

This is how it usually works.