Buying a new place before we sell the old one – best way to arrange the mortgage?

stg123

We’re lucky enough to be able to just about get a mortgage and afford a new place without having to sell our existing flat first.

The plan is definitely to sell our existing flat eventually, but it’s going to take us a while to get it sorted and on the market, and I want to leave it on the market for a while to get a good price.

It occurred to me that if we get a mortgage without selling the first place, we’d scrape through with about 80% of the LTV from our savings, but we’d get a pretty horrible interest rate to reflect this.

When we then sell the flat, we’d be able to overpay quite a lot of the new mortgage, but we’d still be stuck with the original bad interest rate.

Is there any smart way to then have the interest rate moved to reflect the new, effectively much lower LTV? I wondered about looking for mortgages that had few set-up costs and no early redemption charge. Has anyone managed this?

Obviously the easy answer is to work within a chain, or sell our place first, but if we didn’t do that what sensible options would exist?

Thanks!

kingstreet

To do this, you'll need plenty of income, as the new lender will take the existing mortgage into account when assessing your affordability for the new one.

Will you let the flat to help affordability? If so, get consent to let from your current lender.

There are a few products under the "No Penalty/No Fee" heading, but they may not all lend to you because of the existing mortgage, or geographical restrictions;-

Saffron BS
HSBC
Dudley
Melton Mowbray
One Account
Nottingham
Chorley
Darlington.

For this job, an independent broker who can/will look at broker and direct deals is more likely to get you a result as you've a fairly unusual scenario.

dimbo61

You could also look at offset mortgages YBS have deals at 85% LTV then when you sell your flat you pay the equity from the flat into the offset account.
If you do decide to keep the flat you will need consent to let from your existing lender