mortgage, may have to buy before selling

WalterWhite

This is a little complex so bear with me. We found a house that suits us in terms of my office needs (Ltd company, me and one employee) and wife's dream house and location next to her family. Thought it better to put the money into a bigger house rather than company renting offices. Our house is on the market (just) and priced to sell but not yet sold. Made an offer that has been accepted and negotiated that we will put down a 5% deposit now and if our house does not sell in 90 days we buy new house any way. I had confirmed that I could borrow the required amount from existing mortgage provider to do this. the vendor wants me to sign an agreement that I buy after max 90 days or else loose deposit. In return the vendor will take the property off the market. So I need to know that I can purchase the new house even if my current house does not sell in the 90 days. Hopefully it will sell within 90 days but if it does not then I need to be able to put the money from the sale back into mortgage when it does e.g. pay off old mortgage and reduce capital of new mortgage. I can find the money for deposits and at a stretch also to keep the borrowed amount to 85% LTV. Although a higher LTV for a short time may be OK.

Now for the problem. The new house was two semi-detached houses that has been joined but still has two separate deeds, separate utils etc.. Initially this put me off but after doing the sums have come to terms with it. Also selling as two separate houses in the future could make a nice profit (after some conversion work). Problem now is existing mortgage provider, Yorkshire BS, will not lend in this situation where there are two deeds (they don't do buy to let or bridging finance either).

The figures:
New house cost £240,000 (2 amounts for two deeds)
existing house on market for £120,000
existing mortgage has 8 years to run, £40,000 capital with 10,000 on repayment and £30,000 on interest only. Endowment surrender value 13,500 (estimated £22,600 at end of 8 years, £64.59 per month).
Early repayment fee 1% i.e. £397.57

Would love some advice. Any questions please ask.
I guess I need to find a good broker.

Thanks

Thrugelmir

One property - cannot have 2 deeds.

Was the conversion legal?

Annisele

WalterWhite wrote: »

the vendor wants me to sign an agreement that I buy after max 90 days or else loose deposit.

And why does the vendor want this? Is there a possibility the vendor knows the property is unmortgageable?

I ask because whether you can get a mortgage on a particular property isn't just about you and your affordability, it's also about the house. As Thrugelmir says, one property can't have two deeds - and on the face of it this particular house/houses doesn't sound like good security for a mortgage.

ch3101

Have you had interest/offers on your current property?
Do you have sufficient savings to get a decent LTV then just pay in the equity from your current home at a later date or is the mortgage for the full amount a must right now?


Why can't you buy it outright with the meth money?

dimbo61

This is not your dream home this is a pair of semi,s and you will struggle to get a mortgage sign nothing and walk away.
Sell your own home first

WalterWhite

Thanks guys.

Converting 2 houses into 1 isn't illegal and doesn't even require planning permission (converting 1 into 2 does require permission). The property has two deeds because it is effectively 2 houses so has always had 2 deeds. I'm guessing that if I do get a mortgage for this it will effectively be 2 mortgages with 2 sets of fees etc. :-(. Although the price for each house cold be changed so that we buy one less expensive house outright with no mortgage (from sale of existing property and savings) and only then require a mortgage for one of the houses.
The reason for the deposit and max 90 days is in return for taking the property off the market. From the vendors point of view it would be risky for them to take the property off the market for us not to buy after 90 days.
I'm beginning to think committing to this before selling our house is not going to be possible/sensible. And maybe the whole thing is just a bit too strange with having two deeds -worry about selling it some day. The only thing is that there isn't anything else available that suits our location, home and office needs.

Thrugelmir

WalterWhite wrote: »

Thanks guys.

Converting 2 houses into 1 isn't illegal and doesn't even require planning permission (converting 1 into 2 does require permission). The property has two deeds because it is effectively 2 houses so has always had 2 deeds.

If the property is effectively 2 houses. Then that's what you are buying.

getmore4less

Check that building regs have been complied with.

TrickyDicky101

WalterWhite wrote: »

The reason for the deposit and max 90 days is in return for taking the property off the market. From the vendors point of view it would be risky for them to take the property off the market for us not to buy after 90 days.
.

I don't think you have any worries here that the vendor will sell - the current structure (whilst I agree not illegal) is going to make it very difficult to sell (impossible, I would say, if a mortgage is required).

Prothet_of_Doom

You have a number of issues, and need to think about each one independently.

1) 2 sets of deeds? Buyer needs to sort that before you agree to buy, because (and you need to talk to a solicitor) it sounds like a deal breaker to me.
2) Agreeing to penalty clause on timescale? Really ? What if it all goes tits up for some reason? What if you can't exchange on time ?
Personally to agree to risk, there has to be a reward, and there are better ways of achieving this for you like: (Price reduction if you hit the 90 days, but full price paid if you don't)
3) Selling your house before or after you buy? Could your current mortgage be turned into a btl ? would there be a small profit in it ? (ie don't bother selling it?)
4) Dream home ? Ticks all the boxes? wife loves it? Heart is starting to win over head ? Take a step back. There wil be other houses, maybe not today, this week or this month, so, don't do anything that a sensible rational thinking person would do.

amnblog

Spend and sign nothing until you have received some legal advice and identified a suitable mortgage lender.

Good luck