Buying before selling current mortgage-free home?

froogirl

Hello

This weekend, we found that our dream house is up for sale. At present, we are mortgage free (after lots of hard work!) and the cost to "upgrade" to this dream house would be £25k including all fees, moving costs and whatnot. Basically, we would only sell our home to buy this particular house and are willing to pay a little extra in interest or whatever to secure it.

In this situation, I was wondering if there would be any options open to us to buy the new one before we had sold ours, even if it cost more than going the conventional route. Bridging loans, other stuff? I really don't know much about the whole process, as we've only ever bought one house and that was fifteen years ago as first-time buyers.

The total figure involved is about £145k, of which £120k is tied up in our current home. Our combined income is £30k.

Any ideas? Thanks.

pie81

I presume you would intend to sell pretty quickly after you bought the new dream house - i.e. it really is a "bridging" situation not a long term thing??

I don't know much about bridging loans, except I believe they tend to be pretty expensive and so are not desirable where the length of time you'd need the loan is uncertain i.e. dependent on how long you take to sell your existing home.

Another alternative: do you have £20kish in savings? if so, you could probably get an 85% mortgage on the new property. Admittedly this would not be at the best mortgage interest rates (which are only available up to about 65% of property value I believe), but I imagine it would be cheaper than a bridging loan. if you get a mortgage with an offset facility or no early repayment charges, you could then pay down most of the mortgage once you sell your existing house.

I suggest a quick call to London and Country - pretty good, independent fee free mortgage brokers - should be able to advise you for free on the options for this situation. I've used them and found them very helpful.

froogirl

Hi. Yes, it would be a "bridging" situation. We only have £6k in savings after paying off our mortgage so a standard mortgage on the new house wouldn't really be a feasible option. However, I will call London and Country to see what they think. Thanks for taking the time to reply.

keith969

Bridging loan = high risk. What if your house doesn't sell as quick as you hoped? How long could you go on paying the interest if this happenned?

missile

Be careful.

I knew one man who bought his new house during the last crash with the aid of a bridging loan. Could not sell his old one, ended up selling the "new" one and back in his old house and a lot poorer. He would tell everyone his sorry tale, eventually sympathy wore thin and the office wags gave him the nickname

rent a cloud

.

pie81

Another option of course is to offer the vendor of your dream house a little bit more than you think others will pay for it - whilst being open that you have not yet sold your house. For the extra money, the vendor might be willing to wait for you to sell. Or they might not. It really depends on how urgently they want to move - suggest you try to get more info about this from the estate agent. At least with this option, the extra you are paying is capped rather than open ended interest buildling up on a bridging loan.

stokesley

We're in a similar position, but would not need a bridging loan (could fund our dream property from savings). We still are not doing it - should something go wrong with the sale of yours (eg a seriously negative survey result), you could find yourself with two houses for a very long time.

I wouldn't touch it with a bargepole.

froogirl

Thanks, everyone. You have helped me accept that it's not going to happen. I was also helped by the fact that the property developer vendor has just upped the price by £10k AND is asking for best and final offers. I'm just not willing to play that game when we could stay stress-free in our current home. If only I'd known it was at auction last year for half the price. Then I would have taken the risk. Ho hum.

missile

Don't feel too down, I am sure another house will come along when your circumstances are more favourable.