Should I buy before selling? Scrape a deposit from savings?

infocom

Hi. I wondered if anyone could help with a predicament..

We need to move to a bigger house and have our eye on one. We only want this on on the market, we dont want to move for the sake of it.

Our house is for sale but no offers yet, not been on for a week.

The house we want has been on the market for some time, price is dropping, they clearly want to sell it quick.

I am very worried someone else will buy it before we sell our house.

So I am considering cashing in some ISAs, savings, and taking out a £25,000 loan to scrape together a deposit we can use for the new house, and therefore buy this new house on a new mortgage before selling our current one. We can then sell ours whenever then, obviously still quick as possible due to mortgage payments on it but at least we got the house we want!

Once we do sell it I can pay off the loan and re-invest in the ISAs and savings again.

So I wondered if anyone has advice on this just to reassure me this sounds like a good plan or whether its a bad idea for some reason.

Thanks!

eddddy

Do you have a mortgage on your current property? If so, you would have to pass the affordability tests for having two mortgages at the same time.

Also, you may have trouble getting the new mortgage, if your deposit is from a loan.

infocom

Yes we have a mortgage on it. So yes we'd have to pass the affordability test. Its not a large amount, although if we get a loan also then both together may affect the new mortgage. So assuming we can still get a new mortgage, I wondered if there were any other issues, apart from not selling our current property for ages!

ellie27

Can your salary comfortably afford 2 mortgages, bank loan and all of the normal expenses in life, and could it manage if interest rates went up?

What would happen if it took you 16 months to sell your current place? You would need to easily be able to afford that.

I would not do what you are considering. What I would do is knock a few £1000 off your sale price and perhaps accept an offer quickly and then make an offer on the one you want. Then buy and sell on the same day, the way most folk sell and buy houses. A drop of a few k would no doubt be much, much cheaper than if you end up in the situation above, paying 2 houses.

infocom

Yeah I should be able to pay it all, be a bit tight. I have some rental income from a couple of properties. Not enough equity in them to sell and use (and no time anyway, the point is I want to move fast). Not enough equity in my current home to remortgage to release. I should be OK paying.

But I think I found a bigger hurdle which is looking on other threads I am not sure I could get a mortgage if some of the deposit is funded by a loan. Although I need to look into bridging loans, they seem to offer just what I am trying to achieve.

I am concerned about lowering our price because then I may not get the deposit amount I need. Saying that, maybe that idea is not bad... because the amount I drop I could get from the savings I mentioned to make up the deposit I need. I just didnt want to undersell the house, I would lose several thousand, probably between 5k and 10k to sell the house quick I would think.

hazyjo

Search this forum for 'bridging loan'. There have been a couple of very recent questions.

You'll own 2 properties - that in itself comes with various expenses.

Don't forget you may be able to have a lower offer accepted on the house you want. I once dropped on my sale as the vendors agreed to drop significantly on theirs too.

Not sure I'd sleep in your shoes! Definitely try to sell/be in a chain.

Jx

Gigervamp

infocom wrote: »

I have some rental income from a couple of properties.

hazyjo wrote: »

You'll own 2 properties -

Actually, 4.

OP, do you have mortgages on those rental properties too?

AnotherJoe

Gigervamp wrote: »

Actually, 4.

OP, do you have mortgages on those rental properties too?

He must have since he said "not enough equity in them to sell and use"

This whole thing is fanciful. OP it won't work because you won't get a mortage, a bridging loan will be wildly expensive because it would need to be for the whole value of the house, not just the deposit, and the vendor once having seen these financial shenanigans of yours will decline your offer in any case as you are in no position to proceed.

HappyMJ

infocom wrote: »

Hi. I wondered if anyone could help with a predicament..

We need to move to a bigger house and have our eye on one. We only want this on on the market, we dont want to move for the sake of it.

Our house is for sale but no offers yet, not been on for a week.

The house we want has been on the market for some time, price is dropping, they clearly want to sell it quick.

I am very worried someone else will buy it before we sell our house.

So I am considering cashing in some ISAs, savings, and taking out a £25,000 loan to scrape together a deposit we can use for the new house, and therefore buy this new house on a new mortgage before selling our current one. We can then sell ours whenever then, obviously still quick as possible due to mortgage payments on it but at least we got the house we want!

Once we do sell it I can pay off the loan and re-invest in the ISAs and savings again.

So I wondered if anyone has advice on this just to reassure me this sounds like a good plan or whether its a bad idea for some reason.

Thanks!

How about converting your current home and mortgage to an investment property by taking out a buy to let mortgage and using the equity you release to use as a deposit on the property you are buying then taking out a mortgage for the remainder of the purchase price.

glasgowdan

Second home stamp duty?

HappyMJ

glasgowdan wrote: »

Second home stamp duty?

They already own a couple of properties so making the existing home into a BTL won't make any difference to the stamp duty payable.