Mortgage - can they not buy before they sell?

8SID

Hi

Not for me but what happens in the following scenario:

2 ppl not working, took early retirement, and about to reach 60.

They have 20k left to pay on mortgage. house valued at 175k.

They want to buy a house at 200k, bank will give them another mortgage of 50k if needs be.

However they have found a property to buy but have not sold theres yet, as its only just gone on the property.

The seller of the property will not wait around, so what can my friends do to get the property? is there any such mortgages etc that could be secured on the poperty etc until the sale?

Any help appreciated as they are in bits at the moment and im trying to hep them where I can!!

tanith

I have a feeling the only answer would be a bridging loan and they are VERY EXPENSIVE.... someone else might have another idea....

VIGILANT22

Problem with bridging you have to wait 6 months now before taking a mortgage

HelpWhereIcan

It could be possible to arrange it so that their current property is converted to a Buy to Let to allow them to rent it out until sold (although they may have to take the property off the market completely as some BTL lenders will not lend on a property that is being marketed).

This may suit them if they are willing/able to hold onto the property (and deal with the hassle of tenants etc) until the market improves or they get a suitable offer.

This could give them the £105k deposit you seem to imply they need if they borrow the maximum residential mortgage available on their income (£70k from what you post - 20k + another 50k). As long as the rental income is strong enough (and the property is lettable enough) the BTL mortgage could be covered by the rent while they cover the residential mortgage from their own income.

There are so many variables that this is not the sort of thing that can be properly addressed in a forum.

Get some advice from a local whole of market broker.

Ideally use personal reccomendations to pick one or even something like the Yellow pages etc. No harm in speaking to more than one and always make sure to ask the questions Martin suggests in http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816#step2.

Be careful of anyone who approaches you unsolicited and use the services of a face to face adviser unless you are confident enough to deal with someone via post & email.

Hope this helps

Good Luck

getmore4less

Whats their income?
Will this change in the next few years(up or down)?

David_Tonks

As stated by the other persons post Bridging Finance can be expensive. However I have seen it used successful in transactions such as yours. Looking at the deal, the Bridging loan could be done for about 0.95% per month plus fees. Therefore over 6 months the costs would be around 7.5%.

The loan can be arranged in 5 working days so I have seen people use this benefit to negotiate a better purchase price. If you were to negotiate a 5% discount of the purchase price of the house on the basis of a quick completion, then this discount goes a long way to paying the costs of the Bridging Finance.

dimbo61

Sid your friends could get there fingers badly burnt by this.
Retired and living on a pension with a £20k mortgage
Have they got savings to clear the mortgage ?
Taking out a bridging loan and hoping that there house sells while paying 2 mortgages is not a good idea.
Sell there home first and then see whats on the market.
Paying for a mortgage out of your pension income can lead to a poor retirement!