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    • mp80
    • By mp80 14th Jul 17, 8:20 PM
    • 178Posts
    • 32Thanks
    mp80
    Lenders who specialise in two residential mortgages
    • #1
    • 14th Jul 17, 8:20 PM
    Lenders who specialise in two residential mortgages 14th Jul 17 at 8:20 PM
    Hi

    I posted a few days ago about whether or not we should offer on a house, in the end we did and it was accepted. However, our house isn't currently on the market, and rather than be involved in a long chain (which will inevitably cause the deal to collapse as the property is amazing and has vacant possession) we would like to buy it and then sell this place during the process to minimise the risk. We anticipate the crossover where we'd be paying for 2 houses would be about 3 months or less.

    Phoned my current lender (FD), YBS and HBOS and none of them will do two residential mortgages. Probably because of buy-to-let fiddles, but who knows? Is this even possible nowadays? Am I talking specialist lenders or bridging finance who'll charge 10% APR?
Page 1
    • glosoli
    • By glosoli 14th Jul 17, 9:07 PM
    • 564 Posts
    • 307 Thanks
    glosoli
    • #2
    • 14th Jul 17, 9:07 PM
    • #2
    • 14th Jul 17, 9:07 PM
    There are indeed lenders who do second residential mortgages, and would even offer first residential rates assuming it is the first residential with them. Keep looking!
    • mp80
    • By mp80 14th Jul 17, 9:28 PM
    • 178 Posts
    • 32 Thanks
    mp80
    • #3
    • 14th Jul 17, 9:28 PM
    • #3
    • 14th Jul 17, 9:28 PM
    Can you give me any names?!
    • antrobus
    • By antrobus 14th Jul 17, 9:31 PM
    • 14,917 Posts
    • 21,131 Thanks
    antrobus
    • #4
    • 14th Jul 17, 9:31 PM
    • #4
    • 14th Jul 17, 9:31 PM
    We anticipate the crossover where we'd be paying for 2 houses would be about 3 months or less....
    Originally posted by mp80
    The circumstances in which a bridging loan would be appropriate.

    Why would a bank offer a residential mortgage that is only supposed to last three months? I'm not saying that no bank would do so, I don't know the market, but I would have thought it unlikely.
    • mp80
    • By mp80 14th Jul 17, 9:37 PM
    • 178 Posts
    • 32 Thanks
    mp80
    • #5
    • 14th Jul 17, 9:37 PM
    • #5
    • 14th Jul 17, 9:37 PM
    The circumstances in which a bridging loan would be appropriate.

    Why would a bank offer a residential mortgage that is only supposed to last three months? I'm not saying that no bank would do so, I don't know the market, but I would have thought it unlikely.
    Originally posted by antrobus
    You've got it the wrong way round. We already have a mortgage on the place we would sell. The house we're hopefully buying would become our main residence, over a normal 25 year term. This place would then be sold. There's no dependency on deposits, or anything, we can fund both places independently.

    The issue is my current lender want me to sell this place first, and then buy the other one, i.e a normal chain. A process which could inevitably take months and by which time the house we wanted to buy would have been sold.
    • antrobus
    • By antrobus 14th Jul 17, 9:51 PM
    • 14,917 Posts
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    antrobus
    • #6
    • 14th Jul 17, 9:51 PM
    • #6
    • 14th Jul 17, 9:51 PM
    You've got it the wrong way round. We already have a mortgage on the place we would sell. The house we're hopefully buying would become our main residence, over a normal 25 year term. This place would then be sold. There's no dependency on deposits, or anything, we can fund both places independently.

    The issue is my current lender want me to sell this place first, and then buy the other one, i.e a normal chain. A process which could inevitably take months and by which time the house we wanted to buy would have been sold.
    Originally posted by mp80
    Yes, I understand that you already have a residential mortgage on your current house. You want to buy another house, and need to borrow money to finance the purchase of this second home, and then sell the first.

    That is precisely the circumstances in which a bridging loan would be appropriate.

    But you want to take out another residential mortgage on this second property. Presumably your current lender has said no, because it's only going to be for three months, because then a big wodge of cash will be coming in (I assume there is some equity) and a big chunk of it will disappear.

    If I was running a bank that offered bridging loans at 10% (there is a certain risk factor), I wouldn't offer you another standard mortgage at 0.99% (or whatever) to sidestep this cost.
    • mp80
    • By mp80 14th Jul 17, 10:15 PM
    • 178 Posts
    • 32 Thanks
    mp80
    • #7
    • 14th Jul 17, 10:15 PM
    • #7
    • 14th Jul 17, 10:15 PM
    Maybe the lender will view it that way, but that's not what the reality would be. What will happen is I will pretty much wipe out my savings to get the deposit for house 2, and then replenish them with the equity realised from house 1.

    The situation (to me at least) is no different to me suddenly deciding to make a 50k overpayment onto my current mortgage. The bank would still lose out on interest.
    • Lilla D
    • By Lilla D 14th Jul 17, 11:27 PM
    • 238 Posts
    • 109 Thanks
    Lilla D
    • #8
    • 14th Jul 17, 11:27 PM
    • #8
    • 14th Jul 17, 11:27 PM
    As glosoli said, you could get a normal mortgage for the new house, but because you won't sell your current property at the same time, your potential borrowing for the new one will be severely reduced. Why don't you speak to a broker, who will be able to run through the details and discuss your options?

    Antrobus - I think you may misunderstand OP's intentions. They don't want to repay the new mortgage within 3 months or less, they will repay the current mortgage within this timeframe. However, I agree that if OP can't get a big enough mortgage for the new property due to the current mortgage commitment, a bridging loan could be the solution and the price to pay to get the dream house.
    I am a Mortgage Adviser
    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.
    • mp80
    • By mp80 15th Jul 17, 5:42 AM
    • 178 Posts
    • 32 Thanks
    mp80
    • #9
    • 15th Jul 17, 5:42 AM
    • #9
    • 15th Jul 17, 5:42 AM
    Affordability should not be a problem, we have a combined net income of £9k pcm, and pay c. £600 a month for current place, have no credit debt, small car loan finance and fairly low running costs. So even temporarily paying for two houses, whilst it will be more of a stretch as the new mortgage will be £1400 pcm, should be well within finance criteria of 'responsible' lending.
    • Thrugelmir
    • By Thrugelmir 15th Jul 17, 10:21 AM
    • 54,394 Posts
    • 47,228 Thanks
    Thrugelmir
    We anticipate the crossover where we'd be paying for 2 houses would be about 3 months or less.
    Originally posted by mp80
    The issue is my current lender want me to sell this place first, and then buy the other one, i.e a normal chain. A process which could inevitably take months
    Either one or the other. The one thing lenders hate is uncertainty. In effective you asking the lender to shoulder the risk.

    Was your offer accepted to subject to conditions? As the vendor I'd want evidence that you are procedable as purchasers. Before taking the property off the market entirely.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • mp80
    • By mp80 15th Jul 17, 2:26 PM
    • 178 Posts
    • 32 Thanks
    mp80
    I spoke to a provider today who are happy to do 2 x residential mortgages and have issued an AIP - obviously meaningless until it goes through the full underwriting review but at least they didn't knock me down at the first hurdle.
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