Buying another house before selling own.

x66lagger

Hi All,

Looking for some help and advice for my parents. They are both retired and mortgage free. They want to relocate to where we live. They have found their dream property but have not sold their current home yet. To make an offer the vendor wants to see proof of finance.

Obviously they would not want to take out. Another mortgage for a long term and pay unnecessary interest as it would only be short term until they sold theirs. Bridging loans sound like another solution but high interest with a high admin fee.

Their property is valued at £275,000 and the one they want to buy is £250,000. Does anyone have any advice on best solution to progress forward and secure the new property please?

TIA

Mike

Norman_Castle

Not sure about the funding but I think second home stamp duty would be charged. Is this avoidable if the first home is sold within a limited time period?

GrumpyDil

Yes. If they bought the second home whilst retaining their first home they would be subject to the additional 3% stamp duty but would be able to claim a refund if they sell their other house within three years.

However funding is going to be an issue. Have they considered lowering their price to get a quicker sale. Although rereading the OP have they even got their home on the market yet?

AdrianC

Do they have £250-275k in other investments that they can liquidate?

If not, then they're going to have to borrow a lot of money. That's usually done via a mortgage, intended for long-term borrowing, but a bridging loan is an intentionally short-term solution. They don't have to keep the mortgage for the full term - they can pay it off when they have the cash from their sale. Of course they'll have to pay interest for the period they've borrowed the money, and there may well be fees for early settlement as well as the initial fees. It may well be worth them looking at the total fees charged over 1-2yr borrowing, rather than simply the interest.

00ec25

their proof of funding is the fact they have a property to sell. If their dream home's vendors are unwilling to accept an offer from someone who is in a chain waiting to sell then your parents are not going to buy this property unless they get a cash loan.

how old are they? is getting a mortgage even a realistic proposition anyway?

bridging loans do still exist but are incredibly hard to get and very expensive

kinger101

If their house is truly worth £275K, in many areas, advertising it at offers over £250K would get a quick sale.

MobileSaver

kinger101 wrote: »

If their house is truly worth £275K, in many areas, advertising it at offers over £250K would get a quick sale.

+1

Pretty much anything will sell quickly if you offer it at a decent discounted price. They need to compare the costs of expensive finance over a realistic time-frame against simply knocking £10k or £20k off the price for a quick sale.

That may seem like a lot of money to "lose" but in the big scheme of things if it allows them to secure their presumably final forever "dream home?" Seems like a no-brainer to me... always remember "you're a long time dead" and "you can't take it with you."

seven-day-weekend

We wanted to buy our bungalow without selling our house first. We used our savings plus £100k interest-only mortgage. We paid the mortgage off when the house was sold.

There was an early payment redemption, but it was still less than paying the mortgage for the lock-in period.

We used a mortgage broker because of our ages (mid-60s) and only having income from Pensions, but he was able to get us an acceptable mortgage.

Hope this helps.

Sandhy

There are some WeBuyAnyHouse.com type of companies that offer less than market value but it's an instant sell, and money is straight in the bank. No experience of them personally though.

kinger101

Sandhy wrote: »

There are some WeBuyAnyHouse.com type of companies that offer less than market value but it's an instant sell, and money is straight in the bank. No experience of them personally though.

A few threads on here indicate that these guys offer substantially below market value, then try to knock more off close to completion. An estate agent will be able to advise on a price that gets a buyer within a week or two.

chappers

their options are;
Sell their house first and then buy.
Take a mortgage, would need a suitable deposit and a suitable income.
Take a bridging loan again would need a deposit and would be expensive, upwards of 1% arrangement fee and 1% pcm