Buying before selling

Miguelito_2

We want to buy a house for £400k (going to closing soon) but have not sold our current place (owned outright and worth £300k).

We don't have time to sell but also can't get a mortgage to cover the full £400k.

Does anyone know what my options are?

kingstreet

A very expensive and very risky bridging loan for the difference.

ognum

Do you have any money at all towards this? How much is the mortgage shortfall?

G_M

Ronnie Biggs came up with a good idea a few years back...

kingstreet

I know one of our local building societies in the Midlands offers cross-charging facilities. That may be an idea. They would give you a mortgage to buy the new property secured over both properties. Then you pay off as much of the mortgage as you can when the property sells.

You'll need to ask one of the building societies local to you if they offer this. It's quite unusual nowadays. Loads used to do it going back to the early 90s.

Miguelito_2

Thanks.

Ognum: We only have about £25k we could use as a deposit.

King street: This sounds perfect. Do you know if any of the high street building societies do this?

Is it still standard practice to buy before you sell? It was when we last bought (11 years ago).

Thanks again for help.

ognum

Miguelito wrote: »

Thanks.



Is it still standard practice to buy before you sell? It was when we last bought (11 years ago).

Thanks again for help.

It is unlikely that you will now find anyone who will take their property off the market if you haven't got a buyer already.

Some people now sell and rent to put them in a better position to get the house they want.

The housing market is so difficult in some places that having a chain is a big disadvantage

Amazing how the market changes isn't it!!

knightstyle

Please don't do it! My parents got a bridging loan and had two years of worry, broken deals and letdowns on the sale of the original house. They aged 10 years in those 2!
So please wait, you will still have a good choice of houses to buy when a buyer comes along.

lessonlearned

Most of the mainstream lenders no longer offer bridging loans these days.

The heady days of buying before you have sold, getting a temporary loan to fund your new purchase are long gone.

You can still secure "bridging-type" finance but it will be at commercial rates and you will be looking at around 10%. - ok for a month or two but financial suicide if you have to do it for any length of time. Arrangement fees will also be pretty steep too - around £1500.

As others have pointed out the housing market has changed beyond recognition. The old rule book has been thrown out of the window,

A lot of people do indeed sell first and then go into rented accommodation for a while to ensure that they are in the best possible position. I'm doing this myself.

A lot less stressful than trying to juggle a sale and purchase and much much cheaper than short term finance or bridging.

A tenancy of 6 months should be fine, giving you time to source your next property and allow the purchase to progress through to legal completion.

If you make sure the rental is large enough to store your furniture and personal effects and then you will save on storage costs too.

kingstreet

I advise my clients not to even view properties before they have a buyer for theirs. It simply creates unrealistic demands when they put themselves under pressure. We get enquiries about all kinds of hair-brained schemes just so they can get the "dream home" which can't possibly still be available when they are in a truly "proceedable" position.

The funny thing is, when they weigh up the risks of becoming (eg) an accidental landlord and realise they will end up making a loss on the rent v the mortgage and then discover they will pay income tax, even though they will be losing money - it suddenly loses its appeal.

"Dream homes" are likes buses. There'll be another along in a minute...

Miguelito - I don't know any of the major players who do this nowadays. As I said, you might have to ask the local building societies near you if they offer a cross-charging facility.