Mortgage in principle cert for new build purchase (being seen as proceedable)

Mistermeaner

Hi All

Would appreciate some thoughts and comments on the following:

Me and my partner each own (with mortgage) our own houses. Finances as follows:

House 1: Value £135K, mortgage balance £40K, therefore equity, £95K
House 2: Value £140K, mortgage balance £110K, therefore equity £30K

We currently have between us cash savings of about £30K


Collectively we earn £110K+ per annum and after pensions and savings have about £6K a month to cover everything (mortgage, bills, food etc.) We have no other debt (i.e. no loans, store cards, credit card debt etc.). Having checked noddle I think out credit ratings are pretty A+++ with both of us having met all payments going back years. (These amounts ignore bonuses which can be around £50K per year between us)

Our current plan is roughly as follows (for practical reasons).... sell house 2 and use the equity plus our cash savings to pay off the mortgage on house 1 (with us then both living there), meaning our situation would then be:


House 1: Value £135K, mortgage balance £0K, therefore equity £135K.... plus we would have cash savings of approx £20K


We are looking to buy a new build house on a development which is releasing properties variously over 2017 and 2018... the property we are interested in is going for about £380K

In order to be able to secure a plot we will (when the time is right) need to pay a pittance of a reservation fee of about £5K but most importantly be able to demonstrate that we are 'proceedable' - in the developers eyes this means that we must effectively be cash buyers (i.e. not need to sell a property to proceed)... understandable as if we needed to sell we would be a bigger risk to them than someone who is renting etc.

We are loathe to go into rented accommodation so the plan was to try and get a mortgage in principle certificate for the full value of of the house we want to purchase (without needing to free equity in house 1).

With soon being mortgage free we will be easily about to save about £3K-£4K per month so would estimate that:

at Sep '17 we would have £50K cash (plus £130K equity in house 1)
at Sep '18 we would have £80K cash (plus £130K equity in house 1)

In a nutshell with this plan do you think it would be feasible for us to get a mortgage in principle certificate or whatever they are called to be able to demonstrate to the developer that we are proceedable such that they will allow us to secure a plot, without us needing to sell house 1 (i.e. we would need a mortgage in principle certificate of around £350K)?

NB: In reality once we have been able to secure a plot we will have a date for completion which will be about 6-9months away, we will then sell house 1 and move in with parents for a bit if required so when we actually execute on the new property it would be with ~£50K cash + £130K equity from house 1 + mortgage of balance (~£200K)

PS: We are also well aware of the need to stump up approx £20K cash for all the extras and £12K stamp duty etc. - for simplicity I've kept these amounts out of the above calcs (we have the cash to cover this)

Thanks all

glentoran99

You seem to be overly complicating things, simple thing is when you apply for the mortgage will you be earning enough for that size of mortage? The rest is irrelevant really

Mistermeaner

Thanks; if the rest is irrelevant then I guess the question is could we get a mortgage in principle cert for round £350K with earning of £110K+ and no debts (plus sitting on £135K of equity)?

I thought the rest of the info relevant as other may have experience of similar in demonstrating 'proceedability' to a new build developer... to execute our plan we essentially need to apply for a mortgage which is much bigger than we actually need