Is this do able - 2 mortgages till house is sold.

PsiDOC

Hi all. Have a question for you. Is it ok to have 2 mortgages at the same time?
Here's the facts. Looked at a house with 9 acres of land today that the missus and myself have fallen in love with. I get the feeling that I can get about £15k off the asking price if we can move at a reasonable pace IE: No chain. so here's my cunning plan with the actual numbers.
First our existing circumstances:
Myself:
Full time employed, stable job, £42k basic with an average of £6000 overtime on top P.A. Overtime figure based over last 3 years.
Missus:
Partially disabled, stay at home housewife, usual DWP benefits.
Existing home:
£120k -ish value, mortgage outstanging £85k, 15.5 years left on mortgage.
Monthly payment £623

Now the new place:
£300k asking price - but if we can move reasonably quickly on it probably £285k or even a little less..
Deposit on hand: £195k - from savings and sale of land that will be completed next week.
Mortgage required: £90k
LTV: 30% or so.
Average monthly payment approx £630 on a 15 year mortgage fixed term 5 years.

Now what I would like to do is this:
Pop the offer in on the new place and when accepted sort out another mortgage for the £90k and proceed with the sale.
Then put our existing home on the market for sale and if it's not sold by the time we are ready to complete on the new place then possibly get short term tenants in whist awaiting a sale.

I know that means I am servicing 2 mortgages to the tune of £1255 for what is hopefully a short term. I can afford to do this as I usually save £650 - 700 per month anyway and of course getting in short term tenants in will halp with this a little.

Can anyone see any problems with my cunning plan?

Cheers all.

Psi

GMS

Does the new property have any agricultural restrictions attached to it?

Numbers wise there should be options for you. Speak to a broker and see how best to proceed.

PsiDOC

GMS, Thanks for the reply. There's no Agri tie on the property. First question I asked on the phone before viewing the property as we have fallen foul of that one before.

Psi

holly_hobby

Not going into the figs, you do realise that you'll will need consent to let from your current resi lender to let your home (if not sold by completion on your new property with room for a pony !), or if refused, you will need to remortgage onto a BTL mge with them or an alternative provider.

Of course you could take a chance and continue to let even if CTL is refused, BUT, be aware that if the lender finds out, they'll cite breach of contractual terms & conditions, and at very best will load your payrate, at worst will load and request immediate redemption (repayment) of the mge, which will mean a remortgage app to another lender, if not sold and still rented at that point.

You will also have to source a lender (for the new house), that will effectively set aside your existing mge commitment from their affordability assessment (relevant if you haven't sold property A before you wish to complete on the property , as not all lenders will do so. Accordingly I would suggest you engage a broker to cut to the chase in sourcing suitable providers that will fit the bill, and cover all angles.

Not sure how short term, short term is, but the std minimum term for an AST is 6 mths. (notwithstanding notice agreements)

Another issue, is if your tenants would be happy for propsective buyers to be shown round, what will essentially be their home ? So you would need to make it v clear to any prospective tenant(s), that the property will continue to be actively marketed for sale during their tenancy, as otherwise this could have all sorts of access issues for you or your agent, if the new occupants are kept in the dark, and take the right royal hump when peeps start trapsing round, while they're watching Eastenders !

You'll of course also need to report your net rental income under annual SA, and also obtain, provide and meet the usual landlord gtes and aftercare (to which you may chose to employ an agt to act on your behalf).

Who has confirmed theres no tie .... the Vendor or the Agent ? This needs to be thoroughly checked out before you spend any real dosh on the exercise.

Hope this helps

Holly

PsiDOC

Holly, what you have said makes perfect sense - thank you.
I do realise I need consent to let from the mortgage company so will be speaking to them once the ball starts rolling. I also appreciate it's a 6 month standard tenancy which is what I meant by short term.
Tenancy will be done via the same estate agents lettings section that I intend selling the house through, so will let them tell me what I need to put in place with regards to landlords obligations. The gas boilier / central heating system was serviced and certified and last month so I know that is all good. Yes it is only fair to let prospective tenants know the house is being actively marketed for sale. Self assessment isn't a problem either. Was self employed for 5 years till 2006, so filled in enough tax returns to know the drill.
I am currently sounding out my bank at the moment with regards second mortgage. Using their online calc it appears they will lend me what I need, even with my existing commitment, however until I get face to face, who knows. The computer in the bank may say no. If that fails it's plan B and off I go to a specialist.
The agent has confirmed there is no Agri tie on the property.

Psi