Remorgage current house for deposit on new.

underworldjam

Hello,

We currently own outright a flat worth £50,000 (we have never had a mortgage on it). We want to buy a house and quickly due to a soon to be born baby. We have no money fo a deposit other than the value of the flat.

We have thought about doing this:

• Obtaining a mortgage on the flat for approx £20,000 to use as a deposit.
• Buying a house for approx £130,000 using the £20k as a deposit and a normal mortgage (we can get £112,000 from most lenders).

This would mean we could move as soon as we could buy somewhere and not have to wait to sell the flat. We would be able to cover the mortgage on the flat for a few month while it is sold, or possibly keep it and rent it out.

Could we do this?
What mortgage should we get on the flat?
Would we be able to sell the flat only a couple of months after we have just mortgaged it and at what cost?

Many thanks in advance.:)

marathonic

underworldjam wrote: »

What mortgage should we get on the flat?
Would we be able to sell the flat only a couple of months after we have just mortgaged it and at what cost?

A mortgage broker will be able to tell you if it is possible.

You should look into offering £125,000 for the house as opposed to £130,000 as you'll not be required to pay stamp duty at this level.

Personally, due to the hassles involved in applying for mortgages as well as the fees (legal and bank fees), I'd be more inclined to stay in the flat as long as possible whilst it's for sale.

When you really MUST move out, I'd rent a place until the flat is sold. You can proceed with viewings and making offers even before the flat is sold. Until the flat is sold, any offers accepted would result in you being in a chain. After the flat is sold, you'd be seen as a more proceedable buyer by estate agents due to you being chain-free.

If you get a good price for the flat, you may even end up being able to get a 60% LTV mortgage for the new place. This would see you getting some of the better rates available.

As soon as I get to 60% LTV, I'm going to remortgage to the best Lifetime Tracker available at that point - at the moment, it's with HSBC but could be another bank by the time I get there.

Dave_Ham

It is certainly possible, but whether it is the most suitable solution will depend upon the detail of your situation.

You would need a let to buy mortgage to raise funds, there are many variables as to the detail on the product and you are likely to require a broker as many of the promininent lenders in this field only accept applications from brokers.

Good luck

underworldjam

Thank you for the help. Looks like a trip to a broker to discuss our options.