Staged Payments to purchase a new build off-plan

H7pat1a

Hello, I am considering purchasing a new build where the developer requires a deposit and staged payments as the house is built. Is this usual? In order to afford the staged payments I would have to sell my house and move into rented accommodation. Is there an alternative? Some kind of loan facility that would enable me to make the staged payments?

user1977

Not "usual", no. The alternative is to do the norm which is you make the full payment at completion, and the developer can borrow money from somewhere other than you!

What security are they offering you while they build?

MikeJXE

Back in the day 1964 I had my first house built with stage payments

This was with an agreed mortgage with a building society paying the stage payments

8 years later I did similar, bought a piece of land, built with subcontractors and again stage payments to me through a building society 

Not sure if you can get that now but worth a try 

penners324

Run away sounds sensible 

kingstreet

MikeJXE said:

Back in the day 1964 I had my first house built with stage payments

This was with an agreed mortgage with a building society paying the stage payments

8 years later I did similar, bought a piece of land, built with subcontractors and again stage payments to me through a building society 

Not sure if you can get that now but worth a try 

You can for a self-build. This doesn't sound like a self-build to me.

eddddy

H7pat1a said:

Hello, I am considering purchasing a new build where the developer requires a deposit and staged payments as the house is built. Is this usual? In order to afford the staged payments I would have to sell my house and move into rented accommodation. Is there an alternative? Some kind of loan facility that would enable me to make the staged payments?

This sounds like what is called a "Buyer Funded Development".

Does the advertising use the word "Investment"? Are they being sold through a conventional estate agent, or through a company that sells "property investments"?

If you google "Buyer Funded Development", you'll see that it is very high risk, and sometimes a scam. For example:

‘Buyer-funded’ developments are property developments partially funded by the purchase deposits of individual buyers, as opposed to a commercial lender. Buyers will purchase the properties off-plan, including a substantial deposit which is used to fund the project’s completion. This may include costs for construction, marketing, or sales commissions.

....
In reality, however, many buyer-funded developments fail to complete. Where such schemes do fail, it may be due to a variety of factors, including unforeseen costs, failure to secure planning permission, or fraud. In all cases, buyers will have contributed considerable sums of money without a product to show for it.

https://global.lockton.com/gb/en/news-insights/buyer-funded-developments-avoiding-the-perils-of-incompletion

user1977

And if you want any cautionary tales, we have had at least a couple of previous threads by buyers who had paid large chunks of the price towards "investment" properties where, years later, there was still no sign of work even starting.