New build part exchange offers homeowners a convenient, quick, and cost-effective way to move into a newly built home on a new housing development. Best of all, it can be a much faster and less stressful process than buying a secondhand home on the open market, with no estate agents’ fees to pay nor the worry of a chain collapsing.
Plus, with a new build home you also get a lot of other benefits compared to buying an existing property that’s been lived in many times before (as we go into later in this guide).
Read on to find out more about the part exchange process from our new build property experts, and why you could find this a better route to moving home than trying to acquire a secondhand property through an estate agent in the traditional way.
What is new build part exchange?
New build part exchange is when you offer your existing home directly to a new build developer in exchange for covering some of the downpayment costs towards buying a brand new home on the developer’s estate.
It’s a great option to investigate if you’re keen to live on a new build development in a newly built home that hasn’t previously been occupied by another buyer.
It can also help you to move to a more energy efficient home than the one you currently occupy, as modern building regulations are very strict when it comes to energy performance standards – thereby potentially saving you money on your heating bills.
How does new build part exchange work?
1. Determine eligibility
When it comes to new build part exchange the first thing any developer will do is check to see if the home you’re looking to exchange is eligible for the scheme.
Exact eligibility criteria differs from developer to developer. Some developers, for example, require your home’s value to be up to 70% of the purchase price of the home you wish to buy.
2. Agree a purchase price
To ascertain how much your home is worth, the developer will organise for your home to be independently valued by a third party. It will then make you an offer for your home based on what your home could realistically expect to sell for on the open market.
To be clear, the offer the developer makes you will represent the selling price your home could achieve, and not the asking price.
3. Reserve your new home
If you’re happy with the offer the developer makes for your home, you can then directly proceed to reserving your new build home. The developer will then appoint an estate agent to market your home and take responsibility for paying their fees – meaning one less moving cost for you to worry about.
You’ll still have to cover the cost of conveyancing and any associated expenses such as searches and stamp duty, but this would be the case no matter who you sold your home to. At least with new build exchange you don’t have the worry of a chain collapsing, nor the additional costs of an estate agent commission eating into your profits.
What are the benefits of part exchanging your home?
A quick sale
With a new build part exchange you don’t have to wait for the right buyer to come along, nor have the agony of waiting to see if the sale falls through. Selling direct to a developer relieves you of this part of the home buying process, allowing you to sell your home quickly, without any complications from other buyers in the chain.
No estate agent fees to pay
If you sell your property on the open market, not only will you have to find a buyer, you’ll also have to pay your estate agent a fee for marketing and selling your property on your behalf. This is the case even if you use a ‘no commission’ agency, who instead of taking a cut of the proceeds at the end of a sale, typically ask for a flat rate fee upfront.
With new build part exchange there are no selling fees to pay. The developer simply agrees to take your home off your hands for an agreed price, saving you the cost of estate agent fees.
Move as soon as your home completes
Another benefit of exchanging your home through new build part exchange is being able to stay in your existing home until your new home completes. You won’t have to move out prematurely, nor fork out on temporary accommodation while the sale goes through. Your home will be yours for as long as you need it, giving you the kind of peace of mind that can never be guaranteed when buying on the open market.
How can I apply for new build part exchange?
You can apply for new build part exchange directly through any participating developer offering the scheme.
Bear in mind, however, you will still need to pass a financial assessment to determine your affordability to purchase the home you wish to buy and your ability to meet the monthly mortgage repayments, before you can progress your application.
To secure a mortgage in principle from a participating lender, contact our Threshold mortgage specialists today by requesting a callback or using our online contact form.
Your home may be repossessed if you do not keep up repayments on your mortgage.