Lenders who specialise in two residential mortgages

mp80

Hi

I posted a few days ago about whether or not we should offer on a house, in the end we did and it was accepted. However, our house isn't currently on the market, and rather than be involved in a long chain (which will inevitably cause the deal to collapse as the property is amazing and has vacant possession) we would like to buy it and then sell this place during the process to minimise the risk. We anticipate the crossover where we'd be paying for 2 houses would be about 3 months or less.

Phoned my current lender (FD), YBS and HBOS and none of them will do two residential mortgages. Probably because of buy-to-let fiddles, but who knows? Is this even possible nowadays? Am I talking specialist lenders or bridging finance who'll charge 10% APR?

glosoli

There are indeed lenders who do second residential mortgages, and would even offer first residential rates assuming it is the first residential with them. Keep looking!

mp80

Can you give me any names?!

antrobus

mp80 wrote: »

We anticipate the crossover where we'd be paying for 2 houses would be about 3 months or less....

The circumstances in which a bridging loan would be appropriate.

Why would a bank offer a residential mortgage that is only supposed to last three months? I'm not saying that no bank would do so, I don't know the market, but I would have thought it unlikely.

mp80

antrobus wrote: »

The circumstances in which a bridging loan would be appropriate.

Why would a bank offer a residential mortgage that is only supposed to last three months? I'm not saying that no bank would do so, I don't know the market, but I would have thought it unlikely.

You've got it the wrong way round. We already have a mortgage on the place we would sell. The house we're hopefully buying would become our main residence, over a normal 25 year term. This place would then be sold. There's no dependency on deposits, or anything, we can fund both places independently.

The issue is my current lender want me to sell this place first, and then buy the other one, i.e a normal chain. A process which could inevitably take months and by which time the house we wanted to buy would have been sold.

antrobus

mp80 wrote: »

You've got it the wrong way round. We already have a mortgage on the place we would sell. The house we're hopefully buying would become our main residence, over a normal 25 year term. This place would then be sold. There's no dependency on deposits, or anything, we can fund both places independently.

The issue is my current lender want me to sell this place first, and then buy the other one, i.e a normal chain. A process which could inevitably take months and by which time the house we wanted to buy would have been sold.

Yes, I understand that you already have a residential mortgage on your current house. You want to buy another house, and need to borrow money to finance the purchase of this second home, and then sell the first.

That is precisely the circumstances in which a bridging loan would be appropriate.

But you want to take out another residential mortgage on this second property. Presumably your current lender has said no, because it's only going to be for three months, because then a big wodge of cash will be coming in (I assume there is some equity) and a big chunk of it will disappear.

If I was running a bank that offered bridging loans at 10% (there is a certain risk factor), I wouldn't offer you another standard mortgage at 0.99% (or whatever) to sidestep this cost.

mp80

Maybe the lender will view it that way, but that's not what the reality would be. What will happen is I will pretty much wipe out my savings to get the deposit for house 2, and then replenish them with the equity realised from house 1.

The situation (to me at least) is no different to me suddenly deciding to make a 50k overpayment onto my current mortgage. The bank would still lose out on interest.

Lilla_D

As glosoli said, you could get a normal mortgage for the new house, but because you won't sell your current property at the same time, your potential borrowing for the new one will be severely reduced. Why don't you speak to a broker, who will be able to run through the details and discuss your options?

Antrobus - I think you may misunderstand OP's intentions. They don't want to repay the new mortgage within 3 months or less, they will repay the current mortgage within this timeframe. However, I agree that if OP can't get a big enough mortgage for the new property due to the current mortgage commitment, a bridging loan could be the solution and the price to pay to get the dream house.

mp80

Affordability should not be a problem, we have a combined net income of £9k pcm, and pay c. £600 a month for current place, have no credit debt, small car loan finance and fairly low running costs. So even temporarily paying for two houses, whilst it will be more of a stretch as the new mortgage will be £1400 pcm, should be well within finance criteria of 'responsible' lending.

Thrugelmir

mp80 wrote: »

We anticipate the crossover where we'd be paying for 2 houses would be about 3 months or less.

The issue is my current lender want me to sell this place first, and then buy the other one, i.e a normal chain. A process which could inevitably take months

Either one or the other. The one thing lenders hate is uncertainty. In effective you asking the lender to shoulder the risk.

Was your offer accepted to subject to conditions? As the vendor I'd want evidence that you are procedable as purchasers. Before taking the property off the market entirely.

mp80

I spoke to a provider today who are happy to do 2 x residential mortgages and have issued an AIP - obviously meaningless until it goes through the full underwriting review but at least they didn't knock me down at the first hurdle.