Mortgage on a 2nd property

helptheden

Hi,
I am hoping that someone may be able to offer some advice on how to finance the purchase of a property without selling my existing property.

A property (next door to my in-laws) has become available (the previous occupier) passed away a few months ago. The property has been put up for sale and is priced around 30k less than other properties in the area, however it needs extensive work done to it (central heating/electrics/re-plastered throughout/new kitchen/bathrooms etc), so think that the asking price is not realistic (especially in todays climate).. I have recently had a viewing and am considering making a low offer (The property is currently valued at 190k, I think I would be willing to pay 150k max), however, I have not spoken to anyone about mortgages as yet?

We currently have a one account mortgage for our property and prob have between 90 to 100k equity in the property.

Our current thinking/preference would be to buy the property and renovate it while staying in our current property. I expect that we would miss out if we have to get our property sold before making an offer on this property. We have not decided whether to let or sell our current property when renovations are completed (currently leaning towards selling, however, in current climate might not be straight forward).

Options that I have thought of are:

• Get mortgage (prob Interest only) for the new property, then switch to repayment mortgage if/when my current property is sold (which would hopefully result in living in a bigger property with a smaller mortgage!) Im not sure how viable it is in the current climate to get a mortgage on a second property?
• Speak to my current mortgage provider (one account) to see if it would be possible to get an increase in my facility to buy the property – A sort of bridging loan until I sell my current property (Not sure if they will be able to offer me anything like this?).
• I’ve heard about bridge loans to finance the purchase of a property, I don’t know much about these so do not know whether this would be a good idea?
• Forget about it, should not stretch ourselves in this current climate.
• Forget about it… Do I really want to live next door to the inlaws? ; )

I am currently overpaying the one account mortgage by about 2.5k a month so think I would be able to cover the two mortgages. We also own another property outright, which we rent out (currently on a 5 year lease) and have good credit history. I obviously need to speak to my current mortgage provider, however, thought I’d ask here for opinions on the best way to go about buying this property..
Any advice is welcomed

Robert_Sterling_3

See other similar thread

Conrad

By far the easiest approach is to raise capital on your existing home with the One Account, but you havn't said how much equity you have. You'll obviously need a enough to allow for the full £150k top up and give TOA a further equity cushion.

Plan B is a second mortgage raised on the new one, but you will likely need 25% deposit.

One or two lenders can do it this way without having concern or interest in what happens to the existing property, BUT, they expect you to inhabit the new immediately which means the valuer must state the property is readily habitable.

3rd option is do a 75% B2L but again it will need to be habitable

4th and most expensive option is bridging, but the max ltv will be 75%, but probably less so you will still need to raise deposit on TOA. You dont state if you have any savings.

Fairly complex and there will be insurance issues to untangle - for example if you say you are going to live in the new one immediately then the insurer will provide cover to reflect this.

Good luck

helptheden

Thanks for the advice, I thought that using the one account would be easiest option, however, I don't think I have enough equity to do this...

One account valued my property at 232k when i took out the mortgage last summer, i've currently got a facility of 145k (I expect that I could get this raised closer to the property valuation). My current balance is 98k..Therefore, I have just under 50k accessible equity.. I've put most of my savings into this account.. Think that a second mortgage is the way forward....Did'nt realise I would need a 25% deposit though...Ouch!!!