Please help I'm buying a house for the first time

Sharan31

Me and my boyfriend are looking to buy our first house together however my situation is quite complicated as I'm named on my moms mortgage and won't be able to come off for another couple of years. Me and my boyfriend are interested in buying a house at auction and renovating it as we think this will be a really good opportunity for us. I have spoken with a mortgage advisor and he is saying a bridge loan will be more suitable for us if we are buying at auction can anyone help me as to what a bridge loan exactly is and if it will benefit us please??? Also he is saying my our stamp duty will be really high because I have another property in my name, will this effect me considerably?
Sharan xx

AnotherJoe

To be blunt, since you dont have a clue what you are doing I suggest you dont go through with this plan until you have learned considerably more. And then once you've learned more, you'll decide you dont want to go through with it anyway

Are you aware for example how expensive bridging loans are? Think eye-bleedingly expensive. Arm and a leg and the other leg.

Then, what happens if you can't get a mortgage to close that off? Think bankruptcy. Will you even be able to get a second mortgage when you are already on one? Seems very unlikely to me reading between the lines.

And yes, add stamp duty for buying a second property unless the house you buy is under £40k.

I think your best plan is, save for two years and get off the other mortgage (why cant you come off for two years?)

Or, bf buys house, and you buy into it two years later. Buying a house at auction is one of the riskiest things you can do. Get it wrong, lose all your money and money you dont even have such as the equity in your other house you own with your mother.

Post your income (joint) and size of mortgage on your other house.

hazyjo

tbh, you should see a solicitor as you seem very naïve regarding the whole process.


I've bought 7 houses before and I'd hate to buy at auction (loads of reasons - search the forum for 'auction' and read a few posts as there are lots). Most/some properties in auction are unmortgageable which is why they're being auctioned. You are also committed to buy once the hammer falls.


Also search for 'bridging loan' as there's lots to learn there too.


Yes, 3% stamp duty. It makes a huge difference - google calculators.


Jx

MyOnlyPost

Under new government rules you must pay an additional 3% stamp duty above the prevailing rate on any additioal homes. This is aimed at curbing Buy to let landlords and weekend home purchases, but unfortunately does not distinguish your situation either so will affect you.

Usually a lender will only offer a mortgage on a habitable property. If you buy a house which is uninhabitable you can take a bridging loan to cover the cost of the property + renevations and then take a mortgage to pay off the bridging loan when the home is mortgagable. As others have said (not necessarily politely) not a good idea for a 1st time buyer as very high risk

glasgowdan

If you come off your mum's mortgage and make the new house your sole property within a certain time period after buying g it you'll be able to apply for a refund of the extra 3%

da_rule

As has been said, this is a potentially risky and complex area so you should seek some legal and financial advice.

However, there is a difference to simply being named on a mortgage and owning a share in another property. Are you listed by the Land Registry as a registered proprietor? If not then you should only have to pay the regular level of stamp duty.

A bridging loan is essentially a short term loan that is used to make up a short fall in a property transaction. Sometimes, a mortgage company will insist certain works are done before they release some or all of the mortgage money, a bridging loan is therefore taken out and repaid once the works are done and the mortgage company pay out. It could be an option if you are certain that you'd be able to get the works done and 'flip' the property quickly enough.

Sharan31

Hi,

Thank you that makes more sense to me than some of the other unhelpful replies. I wouldn't normally go to an auction as my first option however this house is next door to my partners parents and we know how much potential there is in the property. We believe we can get the work done quick.
My partners sister is a solicitor so we plan to speak to her before hand anyway, she's been away so we haven't had the chance yet hence why I'm trying to do my own homework.
Thanks again for your help.

da_rule

Something else to consider is that if you make a large profit you won't have the private residence relief for capital gains tax even if you lived there as you have bought it specifically to make a profit.

Cakeguts

Don't take any notice of the guide price on the auction information. That is not the price that the house is expected to sell for. It could go for a lot more than that. It could go for not much less than it would in very good condition however you will have had to pay for a survey before you bid because it could have structural problems that are not obvious or it could need a new roof. You also have to have the mortgage in place before you bid because exchange and completion on auction properties is very quick.

hazyjo

Didn't think my reply was impolite or unhelpful. Actually thought it far ruder to say that, but hey ho, each to their own.

I could have expanded but thought it far more helpful for you to read the numerous comments in previous posts which would explain it far better than me trying to repeat them. I don't often refer people to previous posts, but in this instance it did seem to make a lot of sense. If that's rude, then we have different interpretations of the word 'rude'. Thought it was the point of a forum and why previous posts were kept and not deleted. One day, who knows, they may be helpful to someone else...

iantojones40

Aside from all the other issues already mentioned I also wouldn't get too excited about snapping up a house for a 'bargain' price at auction.... from what I'm seeing of sold prices at auction at the moment they're barely any cheaper than the open market.