New Build Purchase Issue - Bridging loan?
Discussion
All,
After a bit of advice on a topic I know nothing about. Am about to do the usual web searches and will be speaking to a FA but was hoping someone can point me in the right direction.
I am combining homes with the other half (OH) and our preferred option is a new build (with obligatory double garage for the toys). OH has sold her house subject to contract and will be chipping in 10% house value as deposit and mine is yet to go on the market and should offer another 10%. There are two developments nearby that have the sort of property we like, the preferred one is a new Barratts development (just launched) and the second choice a Charles Church one that is selling off the last few plots.
We had been thinking (subject to a reasonable offer) of doing a part exchange on mine to make it as easy as possible and Charles Church will do this as long as we can put down 10% deposit (which we can as soon as OH's house exchanges). Barratts however will not reserve a house unless we are "proceedable" (sic?) upon reservation or will only consider part ex when the houses are up to roof level by which time the plots we want may well have gone. I.e. the 10% deposit is not enough to secure the plot. The problem is trying to avoid having to sell mine and rent for 6 months for the Barratts house to be ready (i.e. an additional house move & respective hassle and costs involved) to get the deal done. Maybe I'm missing something but if we agree a Part Exchange now and have a 10% deposit how is that any different in terms of risk to go ahead (please educate me!)
Is there any way of becoming "proceedable" without me having sold my house? Options as far as I know would be get FA to find a Mortgage that does not require me to sell mine (maybe work it as if I am letting mine out) but if this is possible it would be more expensive as the mortgage would be on 10% deposit not 20% or some form of bridging loan about which I currently know nothing.
Any ideas oh great Pistonheads Hive Mind (TM)! All help / advice appreciated and or stories of new build developers from which to learn.
Jim
After a bit of advice on a topic I know nothing about. Am about to do the usual web searches and will be speaking to a FA but was hoping someone can point me in the right direction.
I am combining homes with the other half (OH) and our preferred option is a new build (with obligatory double garage for the toys). OH has sold her house subject to contract and will be chipping in 10% house value as deposit and mine is yet to go on the market and should offer another 10%. There are two developments nearby that have the sort of property we like, the preferred one is a new Barratts development (just launched) and the second choice a Charles Church one that is selling off the last few plots.
We had been thinking (subject to a reasonable offer) of doing a part exchange on mine to make it as easy as possible and Charles Church will do this as long as we can put down 10% deposit (which we can as soon as OH's house exchanges). Barratts however will not reserve a house unless we are "proceedable" (sic?) upon reservation or will only consider part ex when the houses are up to roof level by which time the plots we want may well have gone. I.e. the 10% deposit is not enough to secure the plot. The problem is trying to avoid having to sell mine and rent for 6 months for the Barratts house to be ready (i.e. an additional house move & respective hassle and costs involved) to get the deal done. Maybe I'm missing something but if we agree a Part Exchange now and have a 10% deposit how is that any different in terms of risk to go ahead (please educate me!)
Is there any way of becoming "proceedable" without me having sold my house? Options as far as I know would be get FA to find a Mortgage that does not require me to sell mine (maybe work it as if I am letting mine out) but if this is possible it would be more expensive as the mortgage would be on 10% deposit not 20% or some form of bridging loan about which I currently know nothing.
Any ideas oh great Pistonheads Hive Mind (TM)! All help / advice appreciated and or stories of new build developers from which to learn.
Jim
I may be barking up the wrong tree here and forgive me if I am, but are the house builder offering the help to buy scheme? You could use that to top up your deposit if so then pay the government backed loan off when you sell your house. Interest on HTB is minimal I believe and likely to be cheaper than your mortgage rate so having it "sitting" for a period whilst you sell up won't hurt.
I would imagine that a bridging loan may impact your applications for a mortgage on affordability testing grounds, temporary or otherwise.
I would imagine that a bridging loan may impact your applications for a mortgage on affordability testing grounds, temporary or otherwise.
Help to Buy not possible with any property in background.
Potential way forward would be to say consent to let on your property, then mortgage on new property, if you are not part exchanging, then Barretts amy give 5% gifted deposit, meaning you would get 85% LTV mortgage on new build using Abbey, who will accept 5% gifted deposit on 85% LTV from builder.
Obviously would all need to fit on affordability etc.
Potential way forward would be to say consent to let on your property, then mortgage on new property, if you are not part exchanging, then Barretts amy give 5% gifted deposit, meaning you would get 85% LTV mortgage on new build using Abbey, who will accept 5% gifted deposit on 85% LTV from builder.
Obviously would all need to fit on affordability etc.
Up until today we had not thought we need the help to buy scheme so I don't know much about it.
While it could reduce the rate the problem would still be that while I continue to own my place (where we would be living until the new house were finished) I could not use my income against the theoretical new mortgage agreement required to be considered proceedable by Barratts. The OH does not earn enough on her own by some way and you have to be "vetted" by Barratts own financial people.
So to sum up:
New house value approx £450K
One house sold so have deposit of 10%
One house with equity equivalent to 10% to be sold or preferably part exchanged but is current abode
Developer will not reserve a plot as not proceedable and will not entertain P/X until at roof level by which point they may have already sold (eta still another 6 months until completion).
Option A - Wait and hope it has not sold in approx 4 months until at roof level and P/X
Option B - Sell remaining house ASAP and rent (short term rent a pain / cost of move etc)
Option C - Try and find a mortgage deal that is dependent on me letting mine out and buying with 10% deposit (or maybe use help to buy)
Option D - Some form of bridging loan / other cunning plan.
Note: I would normally just chill out and be patient and go with B but the development appears to be extremely popular...
While it could reduce the rate the problem would still be that while I continue to own my place (where we would be living until the new house were finished) I could not use my income against the theoretical new mortgage agreement required to be considered proceedable by Barratts. The OH does not earn enough on her own by some way and you have to be "vetted" by Barratts own financial people.
So to sum up:
New house value approx £450K
One house sold so have deposit of 10%
One house with equity equivalent to 10% to be sold or preferably part exchanged but is current abode
Developer will not reserve a plot as not proceedable and will not entertain P/X until at roof level by which point they may have already sold (eta still another 6 months until completion).
Option A - Wait and hope it has not sold in approx 4 months until at roof level and P/X
Option B - Sell remaining house ASAP and rent (short term rent a pain / cost of move etc)
Option C - Try and find a mortgage deal that is dependent on me letting mine out and buying with 10% deposit (or maybe use help to buy)
Option D - Some form of bridging loan / other cunning plan.
Note: I would normally just chill out and be patient and go with B but the development appears to be extremely popular...
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