How to arrange Let to Buy Mortgage ?

Biggie

hi all,

Need some advice about arranging a mortgage. I have basically offered on a house. With the following scenario :

My house isn't currently on the market and I know the seller won't accept unless my house is under offer (quite rightfully) so I have offered to come in as a chain free buyer and if my house was to come under offer then depending on timings I would just join the chain. So I do a let to buy while attempting to sell mine.

So how would I go about the timings and making sure the mortgage is arranged in the most efficient way?.

1)Mortgage (B2L): Find out how much I could remortgage my current property as a let. Find a mortgage with no exit\arrangement fees though interest rate will be high. Fill in application form and submit.

2) Mortgage (Main): Find a mortgage for the new place. Using the above amount as a deposit. Would they need to know it's a let to buy or do they just care about how much deposit I’m putting up.

3) Arrange mortgage\survey etc with Mortgage (B2L)

Hold until the seller is ready to proceed, In which case I do the following:

4)
(a) - No buyer found for mine so go ahead with mortgage (B2L) to execute mortgage (main).

(b) - Buyer found discard mortgage (B2L) and go ahead with Mortgage(main). My buyer joins the chain.

5) Attempt to sell mine, if I haven’t sold for a while after purchasing new property then let it. If I do find a buyer then pay back Mortgage A.

Also how do I minimize the time to execute mortgage (B2L) during 4a (Don't fancy spending on a valuation survey and then finding a buyer so that I end up doing 4b) but then I can’t delay for too long if the seller wishes to proceed.


Why can’t they just have sensible bridging loans? :mad:

silvercar

If the LTB pays for itself ie the expected rental income clears the mortgage + a bit for expenses, it shouldn't effect the amount you could borrow on your main home.

You are going to have to make a decision, at least on whether to apply for the LTB mortgage, fairly quickly. Once you have got both mortgage offers lined up you will complete on both products on the same day ie the day you move.

Make sure you can afford to run with both before deciding to go down this road.

We did a similar thing, though we were buying out someone in the chain so were completing on 2 properties on the same day! We worked out you can only delay to the speed of the slowest person in the chain; anything longer and you hold everyone up and risk someone pulling out.

As a general guide, once the chain is complete (have your sellers found anywhere to move to?) you should apply for the mortgage within a week.

Biggie

silvercar wrote: »

If the LTB pays for itself ie the expected rental income clears the mortgage + a bit for expenses, it shouldn't effect the amount you could borrow on your main home.
.

Sure but I need to know how much deposit I have before I can apply for mortgages. Therefore talking to a mortage company\broker will give me an indication of how much I could raise. I do have a rough Idea though.

silvercar wrote: »

You are going to have to make a decision, at least on whether to apply for the LTB mortgage, fairly quickly. Once you have got both mortgage offers lined up you will complete on both products on the same day ie the day you move.

But I was hoping to only go down the L2B route if I didn't find a buyer in time which is will probably be the case.

silvercar wrote: »

Make sure you can afford to run with both before deciding to go down this road.

I pretty sure I can, anyway I intend to sell my current home, but will let it if it gets stuck or if prices start falling

We did a similar thing, though we were buying out someone in the chain so were completing on 2 properties on the same day! We worked out you can only delay to the speed of the slowest person in the chain; anything longer and you hold everyone up and risk someone pulling out.

silvercar wrote: »

As a general guide, once the chain is complete (have your sellers found anywhere to move to?) you should apply for the mortgage within a week.

Problem is I don't want to do a valuation on the B2L until i'm sure I have to.

hmm sounds like I will have to go down the let to buy route and then just sell my current home when ever I can. Will probably just waste a little in fees and may be a few months empty period I guess.

Biggie

Just to add:

my current house technically has no Mortgage.

It's a flex account with my Savings off setting the mortgage.

The savings in this account would provide me with a 37.5 % deposit for the new house.

hmm wonder if I could use this to my advantage in anyway, I can't see how becuase I can't have 2 residential mortgages right ?.

herbiesjp

If you have the funds for teh deposit/purchase costs you do not necessarily need to change your current mortgage to BTL

First port of call is your current lender to see if they will give consent to let - you need to find out what fee they will charge and what interest rate you will move on to (again making sure of no tie-ins)

You then need to find out how much rental income you will get on this property if let out.


Now assuming the rental income you get is greater than the mortgage payment, you can get a residential mortgage on your new purchase (as the lender's should "ignore" the property in the background)

Then potentially, once the first property has sold, you can then plough the sale proceeds back into the new mortgage if you want and assuming you have chosen a deal that allows you to do that.