Two mortgages?

numbercrunching

Newbie here, but I think this is the right place.

Long story short, we are in the process of moving house. We currently own a 1/4 share of our property which we are selling to buy/move to a bigger house. There's about 13k left on the mortgage, and the new house is valued at 100k. We have a 10% deposit available separately to put down on the new house. (a gift from our parents, which from all I have read there shouldn't be any issues with unless they were to die in the next 7 years?)

However the way things are working out, we will be getting the keys for the new house a week before our house sells. (to a cash buyer so no mortgage to fall through there)

We were looking at getting a bridging loan, but I haven't a clue where to find one, and only know the vary basic of information about them. (including that they are expensive)

Is it possible to actually have 2 mortgages on these properties without having any legal or tax implications? We could afford to keep both going for the sake of a week, or even a few if things dragged on a bit longer as the mortgage itself for our current house is only about £90, and the rent isn't a huge amount either.

We do have a small loan, however this is due to be paid off early in the next 6 months.

So can you actually have a mortgage on 2 different properties where none are buy to let, provided you can show you can pay for them?

rb7oaks

First of all, you are right about the 7 years, as long as one of your parents survive 7 years after the gift was made then it will not come into the estate for IHT purposes.

As for two mortgages, I guess it might be possible bu twould really be up to the lending companies; you must be honest with them - but why don't you just make completion on the same day? Have you exchanged on either the purchase or the sale? By the way - you should make sure you have exchanged on the sale whenever you do exchange on the purchase as ANY sale can fall through for all kinds of reasons. I am amazed that your solicitor is not advising you of this.

numbercrunching

We haven't signed anything for either property yet, and our solicitor did say not to sign for the new house until we had signed off on the sale of our current home.

The sellers of the new house want the earliest entry date possible as they had a previous sale fall through and are not wanting to loose out on the house they are buying.

We had originally been happy to have them both conclude on the same day, but the dates worked out differently and my parents had suggested it may be better to have the weeks difference as I'm going to be a few weeks short of giving birth, with 2 young children.
(we've been trying to move since the week before we found out I was pregnant, and the original plan had been to rent so there wouldn't have been any issues with this)

I'm beginning to think it'd be easier (and cheaper) to just have them both conclude the same day. Especially if there is a risk it could slow down or even mean not getting the mortgage on the new house.

ETA - Obviously I'll discuss all this with our financial advisor and solicitor this week, but I'm loosing sleep at the moment going over everything, so figured I'd get some advice/facts from those more experienced than I.

opinions4u

The "two mortgage" situation that you ask about is an underwriter's nightmare. High risk from a lender's perspective which, in the current climate, could easily lead to you being declined.

I'm beginning to think it'd be easier (and cheaper) to just have them both conclude the same day. Especially if there is a risk it could slow down or even mean not getting the mortgage on the new house.

Absolutely the right thing to do.

Anything else is a disaster waiting to happen.

GMS

Do you have a mortgage approved for the new house?

A bridging loan would probably not work as you would be looking for 90% of the value of the property, and the way to repay the bridge would be a mortgage if I am understanding the post properly. A 90% bridge would end up at 93% with fees and interest so would not have an exit with a mortgage.

Oce you know for sure when you are completing on the new property I would suggest sitting down with your solicitor and getting your buyer and the vendor of the new place to agree to sale and purchase completions simultaneously. That way you have no need for 2 mortgages or any form of bridging finance. If your buyer is a cash buyer then he should be able to bring it forward a week, and if not the vendor could move back a week, or all parties meet in the middle.

It could be possible to have 2 mortgages but for the sake of a week and a cash buyer in the equation really should direct you towards the completion at the same time scenario.

getmore4less

The new lender would need to now that this is going to happen if the lending is based on the old mortgage being redeamed.

The old lender does not need to know.

Could your parents fund a short term loan to pay off the old mortgage early to meet the requirements for the new mortgage?

Overlap can help if doing the move yourself, but sounds like movers would be the best option.

rb7oaks

I agree entirely with opinions4u, don't go for any interim finance. Once you have exchange on both sale and purchase then all parties in the chain can relax.... so I would go for calming your vendors fears by going for exchange as soon as possible (obviously dependent upon all searches, mortgages offers etc. down the chain having been done), with a completion on the same day. That way you all get to sleep better at nights. Don't be bullied into creating yourself problems because of someone else's fears. I realise that this is all at a very difficult time, with the baby on the way, but I hope your OH and friends and relatives are basically planning to do all of the moving without you lifting a finger! Good luck.

numbercrunching

Thanks.

I think we're going to go with somehow getting the completion dates on the same day.

Originally the plan was that my parents would buy to let, and then rent to us. They put in an offer to the sellers, lost out to other buyers who then couldn't complete, and thus te vendors came back to my parents. They said yes and put an offer in but as yet nothing has been signed. My parents suddenly decided at the end of last week to gift us the money to buy the house ourselves, since having the full deposit is the only problem. They seem to think it will be fine to swap the offer to us as it's all the same terms etc. (seems a bit shady to me, but our lawyer can deal with that I guess) The sellers want to complete at the start of Oct.
We put our buyer off until the end of Oct to allow us time for getting everything sorted and time to settle. We've since brought that date forward to the middle of Oct. Nothing has been signed there as yet either, but I can't imagine a problem in moving that date forward a few days/a week.

The biggest headache is that we are suddenly in the position of trying applying for a mortgage, and having it all approved for the start of October. Which given the current climate and that mortgage lenders are tightening things up... not going to be easy. Infact, it'd be miraculous if we can pull it off. We have a financial advisor looking over our details and getting back to us on Monday, although from doing my own research we could use the post office. (our credit rating is great so hoping that, combined with being swift with our end of the paperwork, would help things move quickly)

We were going to do the move ourself with various family members large cars/trailers, but it looks like it might be easier to get removals in. It'll probably cost far less than a double mortgage or bridging loan.

GMS

I would suggest, and this is not a biased opinion, that you approach a 'Whole of Market' broker to arrange a mortgage. They will know lenders who are likely to be quicker. If you apply direct to a lender and it hits a snag or delay you will be running out of time. It is possible to arrange completion by October.

Why not let your parents proceed as planned, if they are any further down the line and rent from them. Once you are settled in you could look to buy from them, and still be able to use a gifted deposit as buying from a family member.

numbercrunching

Thanks. We're waiting to hear from our financial advisor first to see what he has found and can suggest. Just feeling the need for a plan b/c/d etc as we've not been having much luck recently and it feels like the time is quickly running out.

If this move works out, I'm never moving again. lol

numbercrunching

So our financial advisor got back to us this morning. Suggested the best deal for us was with the Abbey, 2 year tracker at 5.79% with a £199 product fee.
He also said that avoiding a bridging loan would be far better, but that for the sake of a week it'd be just as easy to keep the mortgage on our current house and that it wouldn't affect getting a mortgage as you have up to a month to declare it. (whatever "it" is) Oh and because we have such a low deposit (10%) having only had a quarter share previously we'd be like a first time buyer type, which would mean the lender would want every bit of paperwork?

From a quick search on one of the well known search engines, (not sure if you are allowed to mention other websites) I've found other deals which are coming out cheaper, and fixed rate mortgages around the same amount aswell. But then I don't know how quick the other lenders are in comparison.

Any opinions?