2nd mortgage advice?

MoneySpendingExpert888

We are in a situation where we are looking to possibly move to a larger house.

There has just been one put up for sale by a developer (last house on the development) and its going for a substantial discount.

Having been to see the property we would be willing to pay the price advertised. The only problem we have is that because its only just come up last minute and we havent even listed our property up for sale yet.

We could be able to get a 25% deposit for this new house without having sold our current property, but would mortgage companies be less willing to agree knowing that you already have an existing mortgage?

Or could i tell them that we are obviously looking to sell our current property but we just dont want to miss out on this new one?

dimbo61

Do you know of a good local mortgage broker ?
If you have a good income and equity in your existing home you maybe able to do this.
Would you consider renting out your existing home, would it sell quickly ?
Talk to a broker

MoneySpendingExpert888

Yes i know of a few local mortgage brokers, not sure how to measure on the 'good' aspect though because all the ones that i seem to speak to are all saying that they are all "whole of market" brokers, but this was regarding a different mortgage situation.

We did think about renting out our existing home but in my view that would then be an 'investment' and in terms of yield it wouldnt actually produce that much because its a family home worth about 250,000, and rental value might only be arout £1,100 monthly max, which would only produce a 4.5% yield. Not that its a bad return, its just that in terms of investment i have had my eye on a few apartments which are yielding around 8% and doesnt tie up as much capital.

From the conversation we have had with 2 local estate agents the house if priced correctly is likely to sell pretty swiftly, i've seen quite a few similar properties come and go quite quick in the past year.

The only thing i am thinking about is how to explain it to the mortgage lenders/brokers, it is basically a case of waiting to buy a home before i've even sold mine, would they take that into account when it comes to the lending? because if we can already afford the 25% deposit without needing to sell our existing home then surely once our old house sells we will be sat on a fairly large chunk of equity which we will then most likely use to reduce the LTV % on our new house?

Sorry it makes sense in my mind, just not sure if its coming out properly? lol

Thrugelmir

Will the developer consider a part exchange?

KRB2725

We had 2 residential mortgages for a period of time. We had to prove rental income for property 1, even though we were selling it (it had been rented out prior to putting it up for sale).

Our broker approached Santander initially, but we ended up going with Halifax. This was in 2011, but certainly there were, at that time, lenders that would allow what you are proposing.

MoneySpendingExpert888

In regards to the part exchange, they said that they just wanted the money because basically they have finished the development and taking everyone off-site, because to hold a sales agent onsite for 1 property wasnt worth it. hence the discount.

Ah right i could have thought about the rental aspect but then i guess i wouldnt even be able to rent out our existing house as we wouldnt have anywhere to go in the meantime? lol

Yes i assume its a matter of finding the right broker who can explain the right situation to the right lender. in their eyes i can see how it might be risky because they will be lending money to someone who also has a mortgage and when they type that into their 'computerised' system it will show up as having two mortgages at the same time which i am guessing will shoot out a negative result.

They would just need to take into the fact that i would be actively selling the house and not actually intending to have two mortgages at the same time. Do you think they would be more lienient if i told them how much the other properties have been selling for and how much of a discount is involved? because surely if they realise that its quite a good deal then its less risky for them?

sam2015_2

You cannot have two residential mortgages at the same time. The new lender will want to know what you going to do with your current property.
(1) If you can get a mortgage for the second property without the help(equity release) of your current property then you can ask your current lender about 'consent to let'. Some lenders will let you rent out the residential mortgage property for a period of time without needing to change it into buy to let mortgage. I don't know about the tax implications(or if any) on this when it comes to selling. The same lender might be able to lend you for the second property too.

(2) if you think that your current property will sell quicker, put it on the market and find a buyer who can complete the purchase quicker.

(3) change the current property to buy to let if you are intending to keep it as an investment property.


Best to talk a mortgage broker.

kingstreet

sam2015 wrote: »

You cannot have two residential mortgages at the same time

You can have as many residential mortgages as you can afford, although one or two lenders won't allow you to have two if one is with them, or going to be with them.

sam2015_2

kingstreet wrote: »

You can have as many residential mortgages as you can afford, although one or two lenders won't allow you to have two if one is with them, or going to be with them.

Apologies! I was just thinking about my situation.
Yes, you can have multiple residential mortgages as long as you can afford them all.