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Separate our transactions?

We are in the process of selling our house and buying a new build property off plan. 

We were due to exchange and complete on both by the end of January 2024. However, as usual the new build developer has delayed the likely completion of the house until the end of March 2024. 

Our buyer who has been patient throughout has said that can’t wait longer than the end of February. Therefore we are thinking of separating the transactions. We have alternate accommodation for the interim. 

I’d just like some advice on the specifics: 

- We are porting our mortgage from our current property to our new build, we have already applied for our new mortgage with the same lender secured on the new property. Will a 2 month gap between selling & buying likely be an issue? (I have an appointment next week with the lenders mortgage advisor). 

- What order would be best with regards exchange / completion. Should we exchange & complete the sale before we agree to exchange on the new build? Or would it be safe to exchange for the sale and then exchange on the new build, then complete sale, then complete purchase? 

- Would all of the funds be returned to us for the interim or be held by the lender/conveyancers if there is >4 weeks between sale/purchase? 

- Are there any likely hurdles or fees that I’ve not considered by effectively not completing in a ‘chain’ on the same day? 

Thank you for any help, much appreciated headache over Christmas. 

Comments

  • Mutton_Geoff
    Mutton_Geoff Posts: 3,791
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    edited 24 December 2023 at 10:31AM
    I split sale & onward purchase, it's no problem at all. Interest rates were very low a couple of years ago but I still invested the proceeds across several instant access accounts then transferred it back to the solicitor in time for new purchase.

    Was no problem pausing the mortgage porting.

    It was nice not paying council tax etc. It was during summer so I just had holidays abroad and AirBnB in the UK to fill the gap. It was a bit messy living out of a storage unit but worked out well.
    Signature on holiday for two weeks
  • SDLT_Geek
    SDLT_Geek Posts: 2,424
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    port_buy said:
    We are in the process of selling our house and buying a new build property off plan. 

    We were due to exchange and complete on both by the end of January 2024. However, as usual the new build developer has delayed the likely completion of the house until the end of March 2024. 

    Our buyer who has been patient throughout has said that can’t wait longer than the end of February. Therefore we are thinking of separating the transactions. We have alternate accommodation for the interim. 

    I’d just like some advice on the specifics: 

    - We are porting our mortgage from our current property to our new build, we have already applied for our new mortgage with the same lender secured on the new property. Will a 2 month gap between selling & buying likely be an issue? (I have an appointment next week with the lenders mortgage advisor). 

    - What order would be best with regards exchange / completion. Should we exchange & complete the sale before we agree to exchange on the new build? Or would it be safe to exchange for the sale and then exchange on the new build, then complete sale, then complete purchase? 

    - Would all of the funds be returned to us for the interim or be held by the lender/conveyancers if there is >4 weeks between sale/purchase? 

    - Are there any likely hurdles or fees that I’ve not considered by effectively not completing in a ‘chain’ on the same day? 

    Thank you for any help, much appreciated headache over Christmas. 
    I think many people would want to do the following in terms of timing of exchange and completion:

    1.  Have simultaneous exchange of the contracts on:
    (a) Your sale, with a fixed completion date to suit you (moving out) and your buyer.  It sounds as if they might accept the end of February.  That is quite a long completion date, but not very unusual.
    (b)  Your purchase, where completion would be "on notice" from the developer.  You would usually want a long stop date.
    A benefit of simultaneous exchange is that you mitigate the risk of the developer having a change of mind and you having to find another property to buy.

    2.  Complete your sale on the contractually agreed date, moving into your alternative accommodation.

    3.  Complete the purchase of the new build when it is finished and the developer has given notice.

    I cannot help you on how the "porting" of the mortgage would work.  Hurdles you might face are:

    (a)  Dealing with change of address twice (or perhaps rely on a forwarding service from your present address).

    (b)  Your conveyancer might be reluctant to hold your money for more than a few weeks.  Solicitors are not allowed to provide a "banking" service.

    There are a number of benefits to avoiding a chain transaction.  You can have a more leisurely and planned move out of your existing home, leaving it as clean as you would like to.  Also there will be less of a rush to move into your new home, in case there are tweaks you would like to make before you move in.
  • kingstreet
    kingstreet Posts: 38,595
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    port_buy said:
    I’d just like some advice on the specifics: 

    - We are porting our mortgage from our current property to our new build, we have already applied for our new mortgage with the same lender secured on the new property. Will a 2 month gap between selling & buying likely be an issue? (I have an appointment next week with the lenders mortgage advisor). 


    This will depend entirely on the lender concerned. Some can keep a ported product open on a non-sim sale and purchase. Others will charge the ERC, offer you a new product and refund the ERC on purchase completion.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • I split sale & onward purchase, it's no problem at all. Interest rates were very low a couple of years ago but I still invested the proceeds across several instant access accounts then transferred it back to the solicitor in time for new purchase.

    Was no problem pausing the mortgage porting.

    It was nice not paying council tax etc. It was during summer so I just had holidays abroad and AirBnB in the UK to fill the gap. It was a bit messy living out of a storage unit but worked out well.
    That's great thank you. Yeah having the money for 2 months or so I'll intend to do similar to maximise any interest for the duration noting instant access in case we are complete on notice for the new build. Our rented accommodation is much cheaper than my current and new build property so we will also benefit from less outgoings in the interim. 

    SDLT_Geek said:
    port_buy said:
    We are in the process of selling our house and buying a new build property off plan. 

    We were due to exchange and complete on both by the end of January 2024. However, as usual the new build developer has delayed the likely completion of the house until the end of March 2024. 

    Our buyer who has been patient throughout has said that can’t wait longer than the end of February. Therefore we are thinking of separating the transactions. We have alternate accommodation for the interim. 

    I’d just like some advice on the specifics: 

    - We are porting our mortgage from our current property to our new build, we have already applied for our new mortgage with the same lender secured on the new property. Will a 2 month gap between selling & buying likely be an issue? (I have an appointment next week with the lenders mortgage advisor). 

    - What order would be best with regards exchange / completion. Should we exchange & complete the sale before we agree to exchange on the new build? Or would it be safe to exchange for the sale and then exchange on the new build, then complete sale, then complete purchase? 

    - Would all of the funds be returned to us for the interim or be held by the lender/conveyancers if there is >4 weeks between sale/purchase? 

    - Are there any likely hurdles or fees that I’ve not considered by effectively not completing in a ‘chain’ on the same day? 

    Thank you for any help, much appreciated headache over Christmas. 
    I think many people would want to do the following in terms of timing of exchange and completion:

    1.  Have simultaneous exchange of the contracts on:
    (a) Your sale, with a fixed completion date to suit you (moving out) and your buyer.  It sounds as if they might accept the end of February.  That is quite a long completion date, but not very unusual.
    (b)  Your purchase, where completion would be "on notice" from the developer.  You would usually want a long stop date.
    A benefit of simultaneous exchange is that you mitigate the risk of the developer having a change of mind and you having to find another property to buy.

    2.  Complete your sale on the contractually agreed date, moving into your alternative accommodation.

    3.  Complete the purchase of the new build when it is finished and the developer has given notice.

    I cannot help you on how the "porting" of the mortgage would work.  Hurdles you might face are:

    (a)  Dealing with change of address twice (or perhaps rely on a forwarding service from your present address).

    (b)  Your conveyancer might be reluctant to hold your money for more than a few weeks.  Solicitors are not allowed to provide a "banking" service.

    There are a number of benefits to avoiding a chain transaction.  You can have a more leisurely and planned move out of your existing home, leaving it as clean as you would like to.  Also there will be less of a rush to move into your new home, in case there are tweaks you would like to make before you move in.
    Thanks for your reply, our buyer was a 'no later than' end of Feb because they were being patient for the new build in order to complete on the same day. However with them no longer being tied to the new build hopefully they'd be looking to exchange first week of Jan and complete within a couple of weeks. Which gives us time to move out in the interim - at less of a rush as you say!

    We are thinking of mail redirection to the rented then re-register all addresses to the new property to save doing it fully twice in such a short space (hopefully 4-8 weeks at most). Only really utilities / potentially broadband if poor 4G/5G at the rental that we'd need to consider fully. 

    As you say with the new build we'll also be able to ensure it's to the right standard before we move in as there won't be a rush at that end. 

    port_buy said:
    I’d just like some advice on the specifics: 

    - We are porting our mortgage from our current property to our new build, we have already applied for our new mortgage with the same lender secured on the new property. Will a 2 month gap between selling & buying likely be an issue? (I have an appointment next week with the lenders mortgage advisor). 


    This will depend entirely on the lender concerned. Some can keep a ported product open on a non-sim sale and purchase. Others will charge the ERC, offer you a new product and refund the ERC on purchase completion.

    My understanding is that we will pay the ERC and refund on purchase completion, but it's a question I have for the advisor next week to confirm ideally in writing or linked to some policy with the stipulations. 

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