Want to buy a new house, but....

skippy64

..... don't want to put my own on the market & be stuck in a chain. I would like the flexibility of not having the stress of our house sale dictating whether or not we are able to progress with a new house purchase. What I would like to know is are there products out there that would allow us to generate a deposit for a new house, apply for a mortgage for the new house & then sell our existing house shortly after the move. We owe only a very small amount on existing home but the house we have seen which we would like to offer on is approx £300K.
I understand that no-one is allowed to name specific lenders but I would like to be able to go to a local broker & speak confidently to them outlining what I require without looking & sounding a bit 'thick':rotfl: Myself & my wife have been both self employed for many years & we have lived in current house for many years, hence not alot owing on existing mortgage, we just now need more living space !!! Any suggestions greatly appreciated.

Leon_W

It sounds entirely possible skippy.

There are quite a few lenders that do not require simultaneous exchange and completion. The one thing that you do need to look at is the required deposit for the new house. If you have no savings then you may have to remortgage the property you are in to raise the deposit. Depending on time scales then even short term bridging may be the answer as that can be secured on your present property.

I'm also sure that no broker will think you are "thick". I've pretty much heard every different scenario there is and in my experience ALL brokers will explain anything that is not understood again and again until it is understood!

Just tell him what you've written above, it makes perfect sense to me.

MortgageMamma

one option would be to remortgage your current property on a buy to let and rent it out to raise the deposit - make sure the BTL doesnt have early repayment charges and is as low in fee's as possible

The liabilty of that property will not be taken into consideration with your new residential mortgage lender, and if they allow let to buy they will also include the income from rental in your affordability calculation

You may have a capital gain to pay on your original residential property upon sale, whether this is a worthwhile route to take is dependant upon the values of the properties concerned

skippy64

Many thanks for your prompt replies Leon & Mortgage Mamma. I had wondered about the possibilty of Capital Gains, would the same apply with a bridging loan if the existing house was being offered for sale at the time of moving into new home ? TIA, Skippy

Leon_W

Don't worry about Capital Gains Tax. There wont be any due to private residence relief.

Read this

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4020890

As long as the house you are selling has been your main house and you have been living there then there is no tax to pay.

zain

Isn't a bridging loan extortionate?

emeraldbugle

We are in exactly the same dilema? Why are bridging loans so expensive, aren't they usually secured on a property until it sells?

MortgageMamma

Bridging loans are expensive as they are high risk if the mortgage does not complete, they also have to be arranged generally very quickly. They are expensive because the lenders know these are the very last resort for most people, and because they are usually only very short term they have to cover costs and make a profit on them as quickly as possible. Whilst bridging is OK in some circumstances, I'd advise you to avoid them if possible.

skippy64

If we didn't raise the deposit via re-mortgage or buy to let route & lets say we raised a deposit the good old fashioned way what % deposit is best for a self cert mortgage. Also if we did it this way would we still be liable for Capital Gains if we in the situation of having a new property whilst still selling previous house shortly after moving out. As I mentioned earlier we wanted to avoid any house-chain problems & we would most likely need to freshen up the decor in our old house after moving out to sell it at its best. Living in a house for nearly 20 years generates a lot of clutter !!

skippy64

I've just realised the link from Leon answers my question about Capital Gains, it just goes to show I wasn't paying attention !!!

toonfish

skippy64 wrote: »

If we didn't raise the deposit via re-mortgage or buy to let route & lets say we raised a deposit the good old fashioned way what % deposit is best for a self cert mortgage. Also if we did it this way would we still be liable for Capital Gains if we in the situation of having a new property whilst still selling previous house shortly after moving out. As I mentioned earlier we wanted to avoid any house-chain problems & we would most likely need to freshen up the decor in our old house after moving out to sell it at its best. Living in a house for nearly 20 years generates a lot of clutter !!

15% deposit will give you almost the entire self cert market to go at