Second Time Buyer

mabmabmab

Hi all,

Have been reading MSE for many years, but this is the first time I've participated in the forums. Hope some of you can help with our situation, or point us in the direction of some good threads where similar has been discussed.

We starting to look around for our next house, with a view to buying around Easter next year, but could be sooner if we come across the right property.

Fortunately we're in a fairly comfortable position financially. Our current property is worth 110k and we're mortgage free. We've also got savings of 120k.

We're looking to add to this a 20yr mortgage with repayments of around 500 to 600 per month, but stretched for a short period of time we'd be willing to pay much more than this (perhaps about double).

We're looking at property valued between 220k and 310k.

My partner does not work. I earn 50k per year.

Here are my questions:

a) If next week we were to find our ideal property for 220k, would we be best getting a mortgage with no ERC after 2 yrs, and paying it off in full in 2 years? (Assuming we could sell our property within 9 months)

b) If next week we were to find our ideal property for 310k, could we get a reasonable mortgage for the difference (190k) that would allow us to put in the 110k from our first property when it sells (in 0-9 months time) without incurring significant penalties?
Would there be any other unforseen expenses in owning 2 homes for a short period?

Many thanks in advance :-)

harvey115

There are two factors here:

Your income: £50K - this gives a potential borrwing from £175K to £225K or maybe slightly more.

Your deposit: You need to come up with a deposit minimum 10% to get more options in the market.

Depending on the above you have the ability to purchase the house suitable to your needs. You need to make up your mind which route would you like to go:

1) Buy another house while having your existing house on sale. This gives you a potential to only look for a house near your initial choice of £220K. You should get a mortgage with no ERC to py up a lump sum on your house sale.

2) Do the selling and purchasing of the home together. This would get you tot he £320K price range as you will have the money from your current house sale for the new purchase. 'Chain'

3) Sell your house first and then either rent or move into a temporary acommodation while your purchase gows forward. Again you will have better options with £320K to spend on your new purchase.

Now the question is would £220K be wnough for your new dream home?

Hope this helps.

dimbo61

You could look at offset mortgages !! and when you do sell you can put the money into the offset account.
Would you want to keep your existing property and rent it out ?
You earn £50K a year and have a very good deposit of £120K so you should be able to get a property of up to £320K.
But you will pay over £10K in stamp duty alone so why not look at properties up to £250 which you can add value too.
With cash in the bank and lots of good builders, plumbers, sparks, plasters looking for work you could extend a suitable place

mabmabmab

@harvey115

1) The 'how much could I borrow?' calculator on this site indicates we could potentially borrow between 163k and 200k. Adding on the 120k savings we have, this would give us a range of 283k to 323k without having to sell our house right?

2) Preferably we'd like to avoid the pressure of getting involved in a chain

3) Good idea, one to consider, but again one we'd prefer to avoid.

@dimbo61

Ah, an offset could be interesting. I've not considered them before as I've always thought we could do better managing a regular mortgage through overpayments. I wonder if we could take an offset mortgage for a year or two and then switch to a normal tracker/fixed rate.

I'd love to get a cheaper property and use our savings to improve/extend it to something perfect for our needs. I never thought that there might be tradespeople out there with spare capacity. Do a lot of properties requiring attention get onto Rightmove?


I've been considering this further, I think what we need is a mortgage with no-ERC or a very short ERC period. The lump sum we'd gain rom selling our house can then be put into the mortgage once we sell our current place.

The next step would be to get an agreement in principle for the upper end of our range, then we can look attractive to sellers if we see something good out there.