Equity to buy new house.

beelzebub_the_1st

Hello, my mum has retired and has a good pension, and is currently selling her house to move to my area. She found a buyer and was a week away from exchange, so she decided to put her stuff in storage and move in with me. However a week later the buyer's buyer pulled out and left her up the creek without a paddle. On top of that mum has had an offer accepted on another property.
The house is selling for £240,000 which is exactly the price other properties of exactly the same type have sold for in the area and the market is moving. And the house she wants to buy is £165,000 and needs some work.
She has about £220, 000 of equity or thereabouts in the house. Can she release this equity and buy the other property, and then pay it off when the original house sells? Which it should do it has plenty of interest, but she doesn't want to wait as she really wants the property she has seen hence the rush, so the equity would be used as a bridge.

paddyandstumpy

Irrespective of whether she has equity, if she's retired will a mortgage lender lend to her?

buggy_boy

Try going to a mortgage broker (make sure they are independent and whole of market), you should not need to pay for this, they get paid by the lender...

Depending on your mothers age and income you may be able to get something like a bridging loan although you will pay for this so there is obviously risk involved if her current property does not sell... There are also other costs such as council tax and utilities.

Also check with her home insurance company, most have restrictions on how long the property can be empty for, if it is empty for longer they may want you to do things like drain the heating system etc which is a real pain...

It may be worth if you are confident that her house will sell quickly, carry on with the purchase but delay things like searches etc that will cost you money for a few weeks, buying a property can take a while and you will probably be able to get yourself a few weeks before getting chased up which may give you enough time to get the current property sold avoiding a need for any sort of extra borrowing. (Dont forget there is an additional 3% SDLT on additional properties that she would have to pay now but would be refundable when she sold her current property)

beelzebub_the_1st

Hi, thanks for the replies. I think the seller that she wants to buy from has agreed to hold off putting his bungalow back on the market, as things are slower in his area then they are in my mum's. Three more exactly like his have come on the market with garages and only 5000 more in price, yet none of these bungalows have moved or had much interest, so despite having the poorer parking he is the only one with a buyer and I think he realises that mum's home will sell quicker so he is better off keeping her as a buyer. Either way I am grateful to his patience. We are getting viewings every day pretty much, a couple of second viewings and a few stupid offers 20k below asking, the estate agents are extremely confident so deep breaths.
I will talk to her about having a chat with the mortgage broker anyway, but I think she is better off holding out for a buyer, thanks for the advice.