Worth Borrowing Money on Existing House for Purchase of Auction Property?

angelavdavis

Hi,

My OH and I paid off our mortgage last year, but have seen a property we are keen on which is going to auction.

In order to raise the finances to purchase and refurbish, we would be looking to remortgage our existing property. We would need to borrow two-thirds of the current (deflated) value of our property to finance the new property.

Although we could afford this mortgage, we would then put our existing property on the market, once the new property, which requires fairly extensive refurbishment, was habitable.

What my concern is relating to is the mortgage itself. Is anyone aware if lenders would be happy with two-thirds mortgage value? Also what maximum salary to mortgage ratio are lenders currently lending?

poppysarah

Have you read the legal pack of the place you're buying?
Speak to your current mortgage company about the possibilities of having more money from them.

theGrinch

as the previous poster has directed, read the legal pack and any special conditions and restrictions.

angelavdavis

poppysarah wrote: »

Have you read the legal pack of the place you're buying?
Speak to your current mortgage company about the possibilities of having more money from them.

I don't have a mortgage!

poppysarah

Well ring a broker and discuss your options.

m_13

Mortgages are available at 60-75% of LTV from quite a few lenders. As others have said, speaking to a broker is probably your best bet.

However, have you thought what you will do with the money you raise if you don't get the auction property? Buying at auction is by no means any sort of guarantee unless you are willing to pay over the odds.

If you do decide to go ahead you need to make sure that you won't suffer high penalties for paying off the mortgage early when you sell your existing property. Many of the best deals are quite inflexible and their early repayment fees are steep.

angelavdavis

m_13 wrote: »

Mortgages are available at 60-75% of LTV from quite a few lenders. As others have said, speaking to a broker is probably your best bet.

However, have you thought what you will do with the money you raise if you don't get the auction property? Buying at auction is by no means any sort of guarantee unless you are willing to pay over the odds.

Provided I can prove I have a mortgage offer, that should suffice on the day (according to the Ts and Cs of the auction).

m_13 wrote: »

If you do decide to go ahead you need to make sure that you won't suffer high penalties for paying off the mortgage early when you sell your existing property. Many of the best deals are quite inflexible and their early repayment fees are steep.

Having already paid off my mortgage completely 15 years ahead of time, I understand the situation with regard to early redemption penalties, etc.

Thanks

m_13

angelavdavis wrote: »

Provided I can prove I have a mortgage offer, that should suffice on the day (according to the Ts and Cs of the auction).

We bought a repossession at auction earlier this year (completed on 10th March). Our solicitor wanted the money in the bank rather than a mortgage offer as once your bid is accepted you have to pay the balance. Different if you are securing the loan on the property you are buying obviously. The auction house don't usually ask for any proof that you have the money other than the 10% on the day (unless it's REDC) as they know you have to complete and can chase you for the money.