release equity on my flat

badri1

Hello - I am new to this site and I need help.
I have a flat which is fully paid and want to sell it to upgrade to a house. I wanted to borrow the full amount of the house against my flat, which is worth the same as the house. however, my bank tells me I can't use my flat to raise the money I need. I am told I can only get a new mortgage which is hardly half the money I need as I am not on a high salary - but sufficient to live on, given I no longer have a mortgage and don't intend to have one, once my flat is sold.
I don't want to get a bridging loan as they cost a fortune? is there any other way to raise the money or do I need to rent a place and sell my flat before I can even think about looking at another house?
Can you help with suggestions? thank you

davidmcn

Why can't you sell and buy at the same time?

saajan_12

badri1 wrote: »

Hello - I am new to this site and I need help.
I have a flat which is fully paid and want to sell it to upgrade to a house. - okay, so sell and buy on the same day.. on completion day, you'll get the sale proceeds for the flat, move out of the flat, use the money to pay for the house (or your solicitors will), move into the house.
I wanted to borrow the full amount of the house against my flat, which is worth the same as the house. however, my bank tells me I can't use my flat to raise the money I need. - You can't get a 100% mortgage on the flat. Especially as you won't be living there, max will be 75% as a BTL.
I am told I can only get a new mortgage which is hardly half the money I need as I am not on a high salary - but sufficient to live on, given I no longer have a mortgage and don't intend to have one, once my flat is sold. - mortgages are usually for a longer term e.g. 10+ years. You'd be assessed on your ongoing ability to fund the monthly payments, which it sounds like you can't For a shorter term loan, go to a broker for other forms of finance.
I don't want to get a bridging loan as they cost a fortune? - they have a high rate of interest, so can get expensive if you need to keep if for a long time if your flat doesn't sell. However an unsecured bridging loan should be easier / cheaper to set up - a mortgage is secured on property, so you incur valuation costs etc, which make it expensive form of short term finance.
is there any other way to raise the money or do I need to rent a place and sell my flat before I can even think about looking at another house? - why can't you sell and buy on the same day, in a chain as most people do?
Can you help with suggestions? thank you

Problems with your way:
- Higher SDLT on house purchase, have to claim refund when you sell flat
- interest cost to borrow money while you own both properties
- arrangement / valuation fees for loan
- early termination fees for loan?

Other suggestion:
1. Get flat on the market
2. Once you have an offer on the flat, look for houses and place an offer
3. Wait for chain to complete (ie your seller has somewhere to move to, their seller has somewhere to move to, etc until someone is selling an empty house. Also your buyer has someone to buy their property, who has someone to buy their property, etc until you reach a buyer who doesn't need to sell.)
4. Instruct solicitors searches, surveys etc
5. Exchange contracts on your purchase and sale on the same day, so you know both are locked in. Pass your buyer's 10% deposit up the chain to your seller.
6. Complete on purchase & sale on the same day, passing flat sale proceeds to your vendor, move out of flat and into house.

Note even if they have the same value, you will need some additional funds for
- Stamp duty
- Solicitors costs
- Survey costs
- Removals
..

eddddy

badri1 wrote: »

is there any other way to raise the money or do I need to rent a place and sell my flat before I can even think about looking at another house?

I'm not sure whether you are in some kind of special situation - or whether you're not familiar with the standard process for selling and buying at the same time.

Just in case you're not familiar with the standard process...

• Normally, you would find a buyer for your flat, and then find a house you want to buy.

• Then you sell your flat and buy the house both on the same day.

• So you use the money from selling the flat to buy the house.

(As others say, you also need to bear in mind all the costs associated with buying and selling.)

badri1

Thank you for all your helpful suggestions. I think that is what I will do.