Buying house before selling mine.

Jackinbox99

Hi

Im looking to buy a house and have seen one I want to make an offer on. Nothing unusual there!

But, rather than sell mine first, ive decided that the easiest option would be for me to buy the other house first, then I can decorate it, move my stuff in over several weeks, then sell mine.

The main reason ive decided that is that ive got so much stuff in my house & outbuildings that it would easily take me 3 weeks to move it all.

The first challange I had was trying to find a suitable mortgage, as when I sell my first home, i`ll have a huge amount of capital which i want to pay off the new mortgage straight away. Ive been offered a mortgage, albiet a 20% deposit required and a high interest rate, but they have no early repayment penalties, which means I can simply remortgage again when i sell my main house as i`ll then I will only need a mortgage for about 15% of the new houses value.

The only downsides I can see to my cunning plan is what if my house doesnt sell quickly... then i`ll be paying 2 mortgages... not a problem as I can afford that. And when I do sell mine, my current lender wants a £1000 early repayment fee. No problem again.

But, is there anything obvious im missing here which I need to be aware off? Do mortgage companies get funny about you having 2 houses? Will me getting a new mortgage, paying the old one off in a few months time then remortgaging again cause issues with credit?

How about tax? Presumably because i`ll be selling my main residence where ive lived for 10 years, I wont get stung on any tax on it?

Thanks
Jack.

Contessa

This sounds like an easy way of buying another house as you would indeed have time to do the clearing, packing and redecorating in your own time. However, it also sounds very expensive! It would make my selling/buying process easier if I could do something similar myself-but I don't think I could afford it:( I don't know if bridging loans are still available (but, again, very expensive)
Sorry I don't know the answer to your question.

sunshinetours

No tax issues of note but the biggest risk is what if by the time you sell your current home you have to take a 20% hit to shift it. What if you lose your job, you will have two mortgages etc

Like most things in life its about balancing the risks which you at least seem to be considering. The risk increases the higher the amount of mortgage payments are to your monthly income

house sgenerally aren;t selling quickly so why not get yours on the market and see if you get a quick sale to avoid the more expensicve route of paying a higher rate mortgage etc

Bellalolo

Have you looked at offset mortgages?

I know Oneaccont offer upto 75% LTV but that would be 75% of both properties together.

RenovationMan

How about sorting out some of the clutter in your current house to see just how much stuff you really need. We moved a couple of months back and we fitted all our stuff into a single van (with more precious items going in a couple of car journeys). We had a good clear out prior to moving, but as a family of four we still had a lot of stuff.

I think you'd be leaving yourself dangerously exposed financially by having two mortgages, not to mention the risk of squatters or vandals on your empty house. You'd also have to sort out different insurance because I believe normal Building insurance stipulates that you can only leave the property unoccupied for a month.

Another option would be to let out your old house and arrange two mortgages, a BTL one for your old house and a residential on for the new. You could then move at your own pace and not worry about having to sell your old house. Your tenants would take care of the BTL mortgage and once both mortgages are paid off, you could have a tidy retirement income from your old house.

You could also receive tax relief on the BTL mortgage, which is a nice perk to have.

Jackinbox99

sunshinetours wrote: »

No tax issues of note but the biggest risk is what if by the time you sell your current home you have to take a 20% hit to shift it. What if you lose your job, you will have two mortgages etc

Like most things in life its about balancing the risks which you at least seem to be considering. The risk increases the higher the amount of mortgage payments are to your monthly income

house sgenerally aren;t selling quickly so why not get yours on the market and see if you get a quick sale to avoid the more expensicve route of paying a higher rate mortgage etc

All good advice there. Thanks.

Pee

MNy view is never, ever, ever do this with bridging finance. I have only ever heard horror stories.

If you really can afford both mortgages, over a prolonged period of time, i.e. maybe two years and if interest rates have headed up a little bit in the meantime, then you can take the gamble - but you are paying whatever a month to store some stuff that may not be worth that much...

Jackinbox99

RenovationMan wrote: »

How about sorting out some of the clutter in your current house to see just how much stuff you really need. We moved a couple of months back and we fitted all our stuff into a single van (with more precious items going in a couple of car journeys). We had a good clear out prior to moving, but as a family of four we still had a lot of stuff.

I think you'd be leaving yourself dangerously exposed financially by having two mortgages, not to mention the risk of squatters or vandals on your empty house. You'd also have to sort out different insurance because I believe normal Building insurance stipulates that you can only leave the property unoccupied for a month.

Another option would be to let out your old house and arrange two mortgages, a BTL one for your old house and a residential on for the new. You could then move at your own pace and not worry about having to sell your old house. Your tenants would take care of the BTL mortgage and once both mortgages are paid off, you could have a tidy retirement income from your old house.

You could also receive tax relief on the BTL mortgage, which is a nice perk to have.

To be honest, ive been having a massive clear out. You wouldnt believe the amount of stuff ive sold on ebay this last couple of months in preperation for a move. The main problem I have is that I have a large workshop with several cars, motorbikes, tools and such like. So it would be easier to move those over a couple of weekends.

It just seems so much easier to buy the other place first. Id hate to sell mine first, then have the house I want to buy pull out and have all the hassle of finding somewhere else. Then the mad stress of having to move the whole house in 1 day!

Like you say, the financial side is the downside. Luckily I could quite comfortably pay 2 mortgages a month on my salary, as my main mortgage is very small.

I do know however the vendors would be looking to move in October, which would give me 2 months or so yet, so my house may well be sold before then.

RenovationMan

Jackinbox99 wrote: »

To be honest, ive been having a massive clear out. You wouldnt believe the amount of stuff ive sold on ebay this last couple of months in preperation for a move. The main problem I have is that I have a large workshop with several cars, motorbikes, tools and such like. So it would be easier to move those over a couple of weekends.

Could you not rent a lockup or some self-storage units to store a lot of your stuff? It's be much cheaper than trying to arrange a second mortgage and certainly safer financially. It'd also have the side effect that your exisiting home will be easier to sell if you've massively decluttered. We were considering renting some storage for all our crap, it'd certainly have made moving a lot less hassle!

I know there is the fear of losing a perfect place, but nothing is moving too much in this market and with so many more properties coming up for sale, by the time you sell you could find a place even nicer than the one you have in mind.

In the end though, only you know how secure your job/industry is and how much of a risk it would be to have two mortgages. One of our former neighbours did this as a bargain house came available and he went for it. It took a while for him to sell up, but the gamble did pay off and he more than made up for what he lost on his sale by what he gained on his purchase. It can certainly be done, so if you decide to risk it then go along to a mortgage broker and see what they can do for you. Remember to sort out that additional insurance though on your empty property!

Good Luck!

Jackinbox99

RenovationMan wrote: »

Could you not rent a lockup or some self-storage units to store a lot of your stuff? It's be much cheaper than trying to arrange a second mortgage and certainly safer financially. It'd also have the side effect that your exisiting home will be easier to sell if you've massively decluttered. We were considering renting some storage for all our crap, it'd certainly have made moving a lot less hassle!

I know there is the fear of losing a perfect place, but nothing is moving too much in this market and with so many more properties coming up for sale, by the time you sell you could find a place even nicer than the one you have in mind.

In the end though, only you know how secure your job/industry is and how much of a risk it would be to have two mortgages. One of our former neighbours did this as a bargain house came available and he went for it. It took a while for him to sell up, but the gamble did pay off and he more than made up for what he lost on his sale by what he gained on his purchase. It can certainly be done, so if you decide to risk it then go along to a mortgage broker and see what they can do for you. Remember to sort out that additional insurance though on your empty property!

Good Luck!

Good point on the lockup... i did consider that, but that would then involve 2 moves effectively... moving everything to lockup, then moving from there to new place once sale goes through. Also id be worried about the security of the lockup etc. as id have a lot of value of stuff in there.

Ive just been on the phone to mortgage people and have sorted a good deal out, so now I have plenty of thinking to do! Certainly the biggest risk will be my place not selling, so I will speak to some agents and see what the market is like.

Cheers everyone for the advice.

SimonMrGreenWard

You'd be better off having a look online at what is selling. Every agent will tell you what you want to hear as they'd like to sell your house. Use Rightmove, type in your postcode and type of property along with a wide(ish) search and include SOLD stc and Under Offer stuff.

Good luck.