Options for buying house while still owning a flat

jamja

Hi there,

My husband and I are looking to buy a house in the not too distant future. We currently own a flat, which we want to sell, but flats in our area are not shifting even when priced way below home report value (we are in Scotland). We expect not to make anything from our flat when we sell so have started saving a deposit for our next place. If we can't cover the mortgage of £48k then we won't sell it.

We have saved just over £20k to put down as a deposit on a new place and are looking to buy a house approx. £125-140k so about 85% mortagage. We are both employed full time - I earn £34k and my husband earns £25k. We have no debts other than our mortgage.

So, our ideal scenario would be to sell the flat, break even or small profit, and then buy a house. If we can't sell for enough then we might consider renting out the flat, but very reluctantly, and only if we could hand it on to be managed fairly comprehensively by a letting agent.

Are there other options out there? Our flat is on Nationwide BMR so we aren't paying much at the moment (although of course this could change). Would NW consider giving us a mortgage for our house without us having sold the flat? Can we own two properties with two mortgages at the same time? We could manage to pay the mortgage on both, but would they lend when it would mean leaving the flat empty? Would they be okay with it being empty if we had it on the market?

I was hoping my brother might consider buying the flat, but he is looking for something with two bedrooms. Could I rent it to him in the short term? I know that there are many warning messages about renting to relatives, but aside from that, is it allowed in a consent to let situation? I had a quick look at the consent to let application for the NW and it asks if it is for a relative - is that a good or bad thing?

Sorry for the ramble, but I am hoping someone can rule in, or out, the options I have been considering. Thanks!

Thrugelmir

jamja wrote: »

If we can't cover the mortgage of £48k then we won't sell it.

What's the rationale behind this?

If property prices rise so will the property you hope to buy. The gap will widen not narrow.

An empty property would merely cost you money. Better to factor in selling and moving on.

jamja

Hi, thanks for replying,

If our flat won't sell for £48k or more then we would have to use our deposit savings to make up the shortfall, as we owe £48k on the flat. If we use some of our deposit then we will need more than 85% ltv for the house. I get a bit nervous when I don't have a little bit of equity, and a 90% mortgage terrifies me! In addition, we have similar flats in our surrounding area going for anything between £29k and £68k. Our house was the last one to sell on our street, for £65k in 2005, so not able to compare very easily - lots of social housing so not many sales, and the council have been cracking down on 'slum' landlords so some forced sales and reposessions.

The cautious side of me would just stay in our flat until we could be sure of breaking even, but I am the wrong end of my 30s and considering starting a family. Our wee flat is not ideal.

baloooo2

We're in exactly the same situation, so I feel for you! In the end we rented out our flat to tenants and we're renting a 2bed with our baby while we wait for things to improve enough to sell the flat, buy a family house, and move on!

jamja

I've arranged to go see a house tomorrow - offers over £118k. The estate agent was asking what position I was in with regards buying and selling - I told her I didn't think I had to sell first...

jamja

Well, saw the house today and really like it. Can anyone help me out with the scenarios in the first post? Would Nationwide, or anyone else, give me a mortgage for the new place if I still had the flat and it was not on the market?