Is it possible to have 2 mortgages for a short time?

pink_petal

Hi
My boyfriend and I have made an offer on a house. It's not been accepted yet but the seller has come back with a question about the dates. They want everything tied up ASAP but we still have a flat to sell (not on the market yet but should be next week).

They want a completion date of 31 July. Not sure if we'd have our flat sold by then, doesn't leave us much time!

Both sets of parents have offered help in paying one of the mortgages if we had to have two for any length of time but my question is would we even be allowed to do this? Can you have two mortgages at the same time if neither is BTL? Would we need a parent to act as a guarantor?

We both earn around £25k. Current mortgage is £79k and the new one would be £96k.

Any help would be much appreciated. We really don't want to offer and then have to pull out even though we could afford to pay both mortgages (with parents help!)

PP

GMS

What is the Loan to Value on the new property?

Is the deposit coming from the sale of the current property?

Buzby

You would be looking for a Bridging Loan, to cover the period of selling your existing property. It is unlikely you wold get two mortgages to run concurrently.

kingstreet

Having two mortgages isn't a problem, as long as you can raise the deposit you need and can prove to the new lender you can afford to pay both.

You may need a higher deposit, as some lenders set a lower maximum loan for second properties, such as Nationwide (85%) and Abbey/Santander (80%).

StuC75

Mortgage company would need to know if you have an interest in any other properties at the time you applue.. Would largely come down to affordability - does earnings cover the multiplications for the combined mortgage amount? most allow 3.5/4 times combined earnings so that looks feasible for the amounts you quote?

Do you have the deposit money to cover what you would need to put down on the second house? so that can be treated as additional purchase.. if its dependent on selling the first one then you are in bridging loan territory - as most would need to see significant equity in the combined position. Youve quoted mortgage balances - what are the realistic property values?

Plan for the worse case scenario of the first property not selling.. how long would you be able to meet both costs? What point do you become the 'Accidental landlord'?.. would you consider converting to let out the first property if its not selling?


Im surprised your buyer was happy to accept if you are not proceedable..

pink_petal

Hi all
The deposit on the new place would be coming from the sale of the flat so would depend on what we sold it for. Judging by what the agent has said we'd be looking about about £10k profit. We could probably raise the deposit before the sale by borrowing from parents then paying them back once it's sold if we needed to. If we had to prove to the lender we could pay both but one of the mortgages would be paid by someone else (my mum) how would we do that?

Thanks again!

pink_petal

Stu, the seller hasn't accepted our offer yet. I'm just trying to work out how we'd proceed if they do. Closing date is friday!

Sorry meant to add: We could afford to pay both mortgages for a while. My mum has just retired and has a decent lump sum and my dad is still working and they have no mortgage on their house so don't mind helping out.

kingstreet

You can't prove to a lender someone else will pay it for you. The lender will want to see your ability to service both mortgages. In the best case scenario, a lender takes the monthly mortgage payment and deducts it from your incomes before multiplying it out to see that the new mortgage is within that figure.

How much is the current monthly mortgage cost? Let's say it's £500 per month. That would see £6,000 deducted from your joint incomes, leaving £44k to cover the new mortgage. If you have no other credit, dependents or childcare costs, this should result in affordability for a mortgage a lot higher than what you need, perhaps over £200k.

On the deposit. If you tell a lender you are borrowing it, you won't be accepted. Only gifts from relatives are likely to be allowed and as mentioned, you're going to need more, perhaps 15% to 20%.

pink_petal

Just realised I didn't answer all the questions!
Our current flat is valued at £100k but in this market the agent has said probably closer to £95 which would give us £15k profit on what we paid. The new place is also valued at £100k and our offer is £96k. We'd be looking at a 90% mortgage if possible!

StuC75

Sounds like your not proceedable - without your parent being legally recognised as Guarantors then theres little the lender could do to pursue your mum in the case of either not paying (as per post #6 where your say mum would pay).

On 50k combined earnings a combined mortgage of 175k would be in the realms of what 'could be' lent on earnings multiple - so may prompt more questions as to why its not affordable without outside assistance.. such assistance would have the lender 'worrying'..

Without the separate deposit - you are looking at bridging loans which are more expensive - and for a reason..

Gifted deposits have spawned many a thread on here about the pros/cons of this.

As for the Estate agents valuations - check what properties have actually sold for nearby and how long that has taken - £10k equity could easily be wiped out..

Sorry to seem negative, but theres an awfull lot that could work against you in this sequence..

kingstreet

Rule 37 - don't look at property until you have a buyer for your own.