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  • FIRST POST
    • Arthien
    • By Arthien 13th Jun 17, 8:28 PM
    • 1,284Posts
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    Arthien
    Temporarily having two mortgages
    • #1
    • 13th Jun 17, 8:28 PM
    Temporarily having two mortgages 13th Jun 17 at 8:28 PM
    Hoping someone can advise as the initial meeting with Nationwide was as clear as mud! My husband and I currently own a house and we're aiming to have renovations finished within the next few months or so.

    However, we've potentially seen another house that we might like to move to (viewing in a few days time). We currently have a large cash sum to put towards it, which would give us a decent LTV and pay the 2nd house higher rate of stamp duty.

    Our optimistic plan would be to purchase the new house without selling the current one, so we'd be chain-free and there wouldn't be a need to rush the renovations on the current house in order to sell at the same time. We would aim to sell our current house a few months after moving into the new one and then put the money from the sale and reclaiming stamp duty towards renovations on the new house.

    We haven't yet managed to get a definite answer from Nationwide on whether they would allow us to do this, as it would mean temporarily having 2 residential mortgages. We ran through all the affordability checks and the amount they're willing to lend on the new house is more than enough but we haven't had a confirmed yes or no.

    We have a telephone appointment booked with a mortgage adviser for Friday, but I don't see the point of going through it all if they won't be able to help, I'd rather know and not waste anyone's time. As I see it, we can afford to service both mortgages at the same time, but they presumably only allow people to have 1 residential mortgage and they have no guarantee that we'd sell our current house.

    Does anyone have any experience of this and can you advise?
Page 1
    • glosoli
    • By glosoli 13th Jun 17, 9:09 PM
    • 465 Posts
    • 266 Thanks
    glosoli
    • #2
    • 13th Jun 17, 9:09 PM
    • #2
    • 13th Jun 17, 9:09 PM
    According to their website, they allow second residential applications up to a maximum of 85% loan to value (at least that's my interpretation of it - http://www.nationwide-intermediary.co.uk/lendingcriteria/general/borrowing)

    Even if they cannot do it, there are certainly other providers who do.

    The main thing is affordability, i.e being able to afford both mortgage repayments, both sets of council tax, water rates, and insurances for both properties. As long as you have the affordability to do it I don't see why it should be a problem.
    • Arthien
    • By Arthien 13th Jun 17, 9:19 PM
    • 1,284 Posts
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    Arthien
    • #3
    • 13th Jun 17, 9:19 PM
    • #3
    • 13th Jun 17, 9:19 PM
    According to their website, they allow second residential applications up to a maximum of 85% loan to value (at least that's my interpretation of it - http://www.nationwide-intermediary.co.uk/lendingcriteria/general/borrowing)

    Even if they cannot do it, there are certainly other providers who do.

    The main thing is affordability, i.e being able to afford both mortgage repayments, both sets of council tax, water rates, and insurances for both properties. As long as you have the affordability to do it I don't see why it should be a problem.
    Originally posted by glosoli
    Thanks, I saw that but wasn't 100% clear whether it's 85% of the value of the new property or the original. We're aiming to have between 70 and 80% LTV, depending on how much it goes for. Regarding affordability, the 2 mortgage payments would actually be less than the initial combined monthly fixed rate and overpayment we made on our current property, so there's no doubt on that front. Our current house is also very cheap to run so if if it took a bit longer to sell than expected, we'd manage without worrying.

    I just have a nagging feeling it'll get dealt with by someone who isn't clear on what we're trying to do and it'll get put through the standard process and rejected. Saying that, the house isn't definitely a go-er, so it's all a bit hypothetical for now, but we'd like to know our position if it means we can sell chain-free in future.
    • MoneyGeoff
    • By MoneyGeoff 13th Jun 17, 10:03 PM
    • 60 Posts
    • 30 Thanks
    MoneyGeoff
    • #4
    • 13th Jun 17, 10:03 PM
    • #4
    • 13th Jun 17, 10:03 PM
    I have just done the same. Initially I applied for the second mortgage with my existing lender. They approved the mortgage in principle based on affordability and my offer was accepted on the property. Then when it came to the mortgage application they realised they couldn't proceed as the total capital of both mortgages was too high a multiple of my salary. They recommended that I apply to a different lender for the second mortgage.

    I tried Barclays but the same thing happened. I said I had a £1000 per month secured debt and they were fine to proceed based on affordability. But then as soon as I explained that the existing debt was another residential mortgage on a different property they got confused and started adding the capital balances together and rejected the application based on the multiple of mortgage to salary.

    In the end I found it easier to just apply online to a different lender and not speak to a human being. Computers can handle the fact that you can afford the payments regardless of whether your existing debt is secured on a residential property or not. You do have to state your existing mortgage amount of course and make it clear on the application you have another property.

    You do have to pay 2nd house higher rate of stamp duty, but you claim it back when your existing property sells.

    Also, you have to pay full council tax on both properties (or at least I do in the councils I have properties in, you may be luckier).
    • kingstreet
    • By kingstreet 14th Jun 17, 8:44 AM
    • 31,455 Posts
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    kingstreet
    • #5
    • 14th Jun 17, 8:44 AM
    • #5
    • 14th Jun 17, 8:44 AM
    Nationwide aggregates the two mortgages, rather than looking at the monthly payments alone.

    You'll probably need another lender, so broker advice would help save you a lot of time and wasted effort.
    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.
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