Timing buying and selling of houses

dbsevern

I am looking to move, primarily to be nearer to my wife's place of work. We are in no real hurry to move, but when we find a house we like, we would like to be able to move swiftly (and ideally simply). We own our current home outright, and also have savings for a deposit on a new house, so were wondering on the sense of taking out a mortgage to complete the purchase of a new house, and then selling our current house "at leisure", with a view to paying off the mortgage on the new house once the sale had completed or shortly thereafter. If we can find a suitable mortgage with no realy repayment charges, then in theory we will only be out of pocket for the arrangement fees and interest for the period between buying and selling. Does this seem a sensible way forward, and are there any pitfalls we should be wary of?

Lord_Baltimore

Won't the mortgage company hammer you for paying up early? I don't think they see themselves as being in the short term loan business.

dbsevern

Just on my initial search there are various mortgages out there with no early repayment charges, so if they don't penalise you for repaying early I can't see anything to stop you taking the mortgage in the short term, but that was kind of the reason for my question. It may be that if the mortgage has a short term fixed period, say a discount for two years, they won't want you paying off within that period, but if they say there are no early repayment charges, then I can see no reason for not paying it off as soon as possible. There will obviously be costs for application etc, but I think they are worth it for the lower levels of stress involved in reducing the chain.

Hoploz

Another option would be to mortgage the current house to release funds to buy the new house in cash.

Then you can either sell it straightaway or rent it for a while before you sell.

That is what I would do.

nomoneytoday

Lord_Baltimore wrote: »

Won't the mortgage company hammer you for paying up early? I don't think they see themselves as being in the short term loan business.

They didn't for me.
The interest rate for a product with no early redemption fees will probably be higher though, so they make their money on that side instead.

Jeff_Djevdet

It’s a good dilemma to have!

The main danger is if the market starts to drop or rates rise (or both!) and you are left holding two properties just for the sake of convenience.

firesidemaid

what you may find is that some lenders don't 'do' short-term lending ie. they don't want to offer a mortgage to you if you are planning on paying it off early.

penguine

If you get an offset mortgage then once you've sold your first property you can just put the funds into your bank account to offset 100%, so you won't be paying any interest on your mortgage. Then repay in full after the early redemption period.

arbrighton

we moved into rented then used proceeds from sale when it went through to fund current home purchase