# Deposit and bridging loans ??



## Rundie (Oct 2, 2007)

We are in the process of buying a 'new build' and the developer has dropped a bit of a bombshell which we weren't aware of.

Apparently they want a 10% deposit and to Exchange contracts by the 13th April, now the 10% we can sort through savings so not an issue however the place won't be built until the end of July so fairly early. looking online this isn't that strange and fairly common.

The main worry is although our house has been recently put on the market it hasn't yet been sold/offered on. Our current house is 100% mortgage free, no debt so as a safeguard I'm guessing we should look at a provisional bridging loan offer secured on the current house to cover our backs should we have problems on or before the date due to complete the new build purchase.

Don't want to lose the new one, confident that we can get a buyer for the current one and willing and able to drop the price if need be (about £90K 'spare' and to play with as the new build is cheaper).

Any experiences or advice appreciated...:thumb:


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## graham1970 (Oct 7, 2012)

Couldn't you just get a mortgage on the new build,then pay off when you sell your current home?
I always thought bridging loans were considered expensive 

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## Mattwilko92 (Aug 4, 2008)

Yeah I bought a new build last year and it was Taylor Wimpey's policy for 10% deposit on exchange of contracts.


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## Rundie (Oct 2, 2007)

Thanks for the replies, not possible to get a mortgage as I'm relocating, taking some time out so have resigned from my current job and won't have an income straight away.
Got around £450,000 in the current house which has only been on the market for a couple of weeks, so not panicking yet just wanted some experiences or ideas.
And thanks, early exhange of contracts and 10% appears to be fairly normal.


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## Arvi (Apr 11, 2007)

Speak to your bank about a bridging loan - none of my clients do this anymore as I guess the rates are ridiculous or the risk to the bank is too high that they don't allow it so this is an avenue you may not be able to go down.

Don't exchange on your newbuild until you have guaranteed finance in place - either your own cash funds or exchange on your sale simultaneously with your purchase, otherwise you are gambling your 10% deposit which you would lose and also be liable towards developers costs and losses if you fail to complete. Speak to your solicitor.


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## Rundie (Oct 2, 2007)

It's a nightmare, had an offer so far regarding bridging, not something we want to do at all. Our situation is that if required we can drop the asking price of the current one by a huge amount if need be, 50/70k and it's a great house in a superb area so I'm 99% sure we won't go down the bridging route. 
Given the timing we are unlikely to get a buyer and Exchange with them in place before we have to put the 10% down, a massive risk but we are determined to buy the new one and have alot on our side with being able to drop price and being debt free.

If we are looking to complete the end of July would it be reasonable to get a buyer to Exchange early, I know developers do it but is it OK to push from our view as I'm assuming we would pass on 'the risk' of not completing?


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## donnyboy (Oct 27, 2005)

Is this an English property? We're looking at new builds from Taylor Wimpey and Stewart Milne and there is no mention of this in Scotland.


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## Arvi (Apr 11, 2007)

You can stipulate in your offer when you find your buyer that you need exchange by a certain date, but until you have exchanged they won't be bound by it, and you need to allow time for a buyer and their solicitor to do the legal work. Your buyer and their solictor won't exchange until they are happy with everything. 

Once they have exchanged they are in a legal contract with you that they need to comply with and complete on the date agreed. If they breach that contract which then means you breach your contract with the developer by not having the funds available, then you would need to sue your buyer and it would ultimately come down to if they had the funds to compensate you.

As I said, speak to your solicitor to express your concerns and ensure you get proper advice.

Good luck!


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## Rundie (Oct 2, 2007)

Thanks mate, yeah it's an English property.

Arvi, that's my thought, try and get a buyer that will agree to exhange asap so we attempt to pass the risk on. Nightmare, we ain't strapped for cash so dread to think how others cope with this sort of thing.


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