Two mortgages while moving

borders

My daughter is wanting to move home. She has an existing mortgage on her flat. She has seen a fixed price house she really likes and would like to buy it before it goes. I have told her I can help with the deposit until she gets her flat sold.

She contacted her mortgage company to see if she could get a mortgage on the new house and keep the existing mortgage until the flat was sold. The two mortgages combined would still be within the amount that they would lend her. They refused to give her two mortgages and basically said she would need to get another mortgage elsewhere.

It must be common for the selling and buying to overlap. If she can afford both mortgages and is still within all the borrowing limits then I dont understand the problem. It's not going to be a permanent arrangement.

Are other lenders likely to refuse her a new mortgage as well? Or is it just this lender?

JimmyTheWig

borders wrote: »

It's not going to be a permanent arrangement.

But the bank doesn't know that. And your daughter can't guarantee it, either.

The usual thing is to buy and sell at the same time. Your solicitor organises things so that they all happen on the same day. It's called a chain.

Where this doesn't happen for some reason, some people get a "bridging loan". Don't know much about them, other than they are very expensive.

If she wants to keep both, she would probably have to have one of them on a buy-to-let mortgage.


Unless she has enough equity (with help from you?) to be able to have the entire mortgage amount on a single property?

Thrugelmir

borders wrote: »

The two mortgages combined would still be within the amount that they would lend her.

On what basis. If the lender is unwilling to make a mortgage offer then more likely not.

Wh05apk

Who is the lender? it may be there policy is not to allow a 2nd mortgage, as they would assume the property may be rented out with a residential mortgage.

She would probably do better using a broker, who could check lenders policies to ensure it fits, otherwise she risks losing the new property.

borders

Thanks for the replies.

The lender would lend her and her husband £165000. The mortgage on the flat is less than £50000. The mortgage on the house would be £100000. The LTV amounts are roughly 60% and 70%. Their refusal was not due to the amounts but due to it being borrowed on two properties.

Would like to avoid a bridging loan as they are expensive. True, I agree that the lender cant rely on it being temporary. I thought if both the mortgages met their requirements then it would be ok. I know that a residential mortgage is given on the basis of it being given on your main residence. But she's moving residence and can people only really move if they line up the dates exactly or pay for an expensive bridging loan? I guess I've been lucky in my moves that the dates have matched.

I did consider buying her flat to let her move but my money is tied up at present. By the time I could get the money, the house could be sold. Even if she did get a second mortgage and get the house, then I would still consider buying the flat in a few months time.

People get two mortgages on two properties. Does one have to be non-residential (buy-to-let as mentioned)?

Other option is that I take out a mortgage on my house and use that to buy the house she likes. When she sells the flat she then gets a mortgage on the house to pay me off. Getting more complicated. I had hoped it would be simpler and quicker for her to get a second mortgage. maybe not....

Wh05apk

I suspect this is just ING's policy, so suggest she uses a broker and uses another lender.

borders

Sorry, just saw the last post. The lender is ING. I did wonder if it was just their policy or if it was common with all lenders.

DannyboyMidlands

Another option would be to chill out a bit. Who says this house is gonna fly off the shelves? and even if it does, there are plenty more fish in the sea.

Just sell the flat first.

JimmyTheWig

borders wrote: »

Other option is that I take out a mortgage on my house and use that to buy the house she likes. When she sells the flat she then gets a mortgage on the house to pay me off. Getting more complicated. I had hoped it would be simpler and quicker for her to get a second mortgage. maybe not....

Why not take out a mortgage on your house and buy the flat?
You could arrange for that to happen on the same day that she buys the house.

Does that not answer all your criteria?

It would also mean that you've borrowed money to finance the purchase of the flat. Which means any interest on that money can be deducted from any rent you received from the flat in terms of income tax. So I would have thought that that would be better than "untying" your money to buy it.

Thrugelmir

If the new house is a "must have". Why not reduce the price of the flat so that it will sell quickly. Rather than incur interest charges and costs on an empty property for an undetermined period of time. Also reduces the risk if property prices fall.

borders

The house for sale is already at a reduced fixed price. A lottery winner thats moved on (lucky sod)and isnt really looking for a big profit, just to sell the house. It ticks every box on my daughter's list. And I live in the Borders. Not a lot of fish in the sea here. Or at least not cheap fish in the right place. Would be sore to miss it if it did go quickly.

Jimmythewig, thanks you're absolutely right. That would work. I've only just considered mortgaging my own house but didnt click that I only needed enough for the flat. Doh!!!! Thats what's good about these forums. People see different angles, or even the obvious. Thanks. Mind as my daughter's existing mortgage is only 1.4% it would still be cheaper if she could get the second mortgage!!