deposit/ valuation help!

rndb

New here but a bit of advice if I may please.

I'm reasonable mortgage savvy but can't seem to find an answer to this.

We're essentially trying to buy a second house (to be our main house eventually) but given that it needs a lot of work doing on it we want to carry on living in ours (ideally) until the work is done, and then sell ours. We do have ours on the market at the moment but we have already found a house we would like to buy and hence are looking at how to afford to buy it without selling ours first.

Mortgage wise the bank/ building society are quite happy we can meet payments for both mortgages and will authorise it. The problem is the deposit for the second house since we need to use savings (minimal anyway) towards renovation, along with possible personal loan depending on costs. And unless we sell ours we are not going to release any equity (also minimal in current market) quickly.

So here is my thought and question.

The house is on the market for 250K but we think we may be able to get it for around 220 given the amount of work it needs plus if we act as 'first time buyers/ no chain' (old lady wants to move into residential accomodation ASAP).
We know the house is worth more than 220, and prob is worth 250 in current condition, prob 300-320 with extension and modernisation.
If valuer for the mortgage did value the house at 250 when we are only paying 220 ish would then that save us having to put in 10% deposit or would we still have to find some form of physical deposit?

thank you in advance

GMS

Lender would base lending on the LOWER of the purchase price or valuation. Cannot use any difference between purchase price and valuation as a deposit (except for family sales and Right to Buy)

You will need a deposit for the second purchase. Could you not raise funds on your current property?

saverjustice

Have you had any interest in your house? How much equity do you have?

kingstreet

I think the best option is to remortgage your own to raise what you need, assuming you have sufficient equity.

Perhaps a penalty-free product which would allow you to sell property one and repay the mortgage early when you have property two completed?

JQ.

Do you think that in the current market a house that is being sold for £220,000 will be valued at £250,000? I think that's very wishful thinking - it ain't going to happen. You will need to find the deposit money I'm afraid.

kingstreet

JQ. wrote: »

Do you think that in the current market a house that is being sold for £220,000 will be valued at £250,000? I think that's very wishful thinking - it ain't going to happen. You will need to find the deposit money I'm afraid.

Agree. Lousy response from me given the OP declared lack of equity in current home.

rndb

It already has been valued at 250-260 thankfully, even given current climate and an offer of 220 would be accepted.

Just lucky I guess

(and btw we said minmal equity but our interpretation of that may be different to yours)

saverjustice

How much of a deposit do you need? Who is the lender?

rndb

between 10-15% deposit. We've had some interest in ours but no offers as of yet (although only been on market few weeks - we didn't think we'd find somewhere we wanted to buy quite so soon!)

saverjustice

I would tread carefully, as the saying goes, many a slip between cup and lip.