Help with moving from renting to owning

getmore4less

Emywoo84 wrote: »

To those talking about overlap, yes, in the scenario mentioned in my original post, there would be an overlap.

In an ideal world we would exchange some time before the 23rd Feb, complete sometime at the beginning of March and not have to leave the rental property until the 23rd March.

That will mean an overlap of rent and mortgage getting paid at the same time that you said you were trying to avoid.

Didymus

G_M wrote: »

There are 2 aspects to this which you may be confusing:


1) cashflow
You are trying to avoid making a rental payment and a mortgage payment in the same month. This suggests you have a cashflow problem which is not wise when buying a new property. You need a contingency fund.

* If you have one, the cashflow would not be a problem.
* If you don't, then you are clearly over-stretching yourself with this purchase.

2) duplicating payments on properties
You are concerned about paying rent to cover a period when you will also be a home-owner and paying a mortgage for the same period.
This is usually unavoidable, but can be minimised by
* agreeing a longer gap between Exchange and Completion
* giving your month's notice (calender month or tenancy period? Depends on type of tenancy) the day you Exchange
* the dates you actually pay your mortgage (and rent) are irrelevant - it's the period they cover that matters.

I was using the term ‘pay our rent on the 24th’ for ease, but that is in fact the start date of each monthly rental period, with each one ending on the 23rd.

I don’t have a cash flow problem. We have just inherited money and have funds in the bank, however I would still like to aim to not pay rent and mortgage in the same month. We pay £1150 in rent each month, plus our first mortgage payment of around £1600 would be a lot to pay in the first month if avoidable, and would mean savings could be put to better use if we do avoid it.

As far as I can see at the moment, we will pay our last rent payment on the 24th of Feb, for the period up until 23rd March, hopefully complete beginning of March, and then pay our first mortgage payment on the 1st April, giving us a couple of weeks crossover and avoiding using savings for an extra period of rent.

Fingers crossed that’s how it will go, but we’re prepared for it not to.

Didymus

getmore4less wrote: »

That will mean an overlap of rent and mortgage getting paid at the same time that you said you were trying to avoid.

I don’t believe it will. As stated in a reply above, as far as I can see, if things go as currently planned, we will exchange, give notice then pay our last rental payment on the 24th Feb for the period ending 23rd March, complete first week of March, have a couple of weeks crossover, and then pay our first mortgage payment on the 1st April, as our mortgage company says they take the first payment the month after you move in to the property. (We’re already aware that the first payment will be larger to account for the interest for the weeks before we make the first payment).

getmore4less

You will be paying rent for the overlap period and interest on the mortgage debt at the same time.

It does not matter when the money goes out you are paying over the overlap.

This thread has been a waste of peoples time you misled people at the start saying you did not want to pay an overlap.

Didymus

getmore4less wrote: »

You will be paying rent for the overlap period and interest on the mortgage debt at the same time.

It does not matter when the money goes out you are paying over the overlap.

This thread has been a waste of peoples time you misled people at the start saying you did not want to pay an overlap.

It may be a waste of time to you, but I was asking for advice on whether the scenario I gave would mean I do not need to pay rent and mortgage in the same month.

I believe the scenario I have means that I will pay rent out of my salary which is paid on the 24th of each month in Feb and then pay my mortgage on the 1st April out of my salary that I will be paid on the 24th March.

I don’t mind if there is crossover in being in the property in order to move at a more relaxed pace and complete any necessary work and decorating.

I don’t see how you can think it doesn’t matter when the money goes out, of course it does.

If, as I stated above, I am paying rent out of one pay check and then mortgage out of the following one, I do not need to touch my savings to cover a double payment and I can use them for better things for the property.

If I was paying rent and mortgage in the same month, I would need to use some of my savings to cover one of the payments, meaning less money for the property for any works that are required.

As a fairly new person to this forum who was asking for advice, your post doesn’t give a very good impression of it. I had a specific scenario and assumptions in mind and asked whether my thoughts were correct, and I believe they are.

getmore4less

Once you have decided to have an overlap where you pay rent and interest for a period the total does not change.

Where it comes from and when does not matter you still have the same money left.

Didymus

getmore4less wrote: »

Once you have decided to have an overlap where you pay rent and interest for a period the total does not change.

Where it comes from and when does not matter you still have the same money left.

To me, it matters where it comes from which is why I asked for reassurance that what I thought was the case was correct. I may not have explained myself properly in the first post, and you may not understand my reasoning, but I wanted to check I would be paying two payments out of two pay checks rather than 2 payments out of one.

The extra money towards my first mortgage payment is fine, I can cover that out of my monthly salary, but paying £2750 out of one pay check would have meant having to use savings for the rent and mortgage payments. Paying out of two separate pay checks means my savings are not touched and can be used for decorating etc and I would feel better about spending inheritance from a relative that has passed on something constructive rather than towards rent.

getmore4less

The net position is the same you are fooling yourself if you think you have somehow saved some money.

Cakeguts

The money saving thing reminds me of my grandmother who couldn't pay the window cleaner with money stashed under the top of her wardrobe it had to be money that came from her handbag as that contained her pension even if the money under the top of the wardrobe was more accessible at that time than the money in her handbag and all the money came from her pension but just at different times and she always had the window cleaner it wasn't a suprise that she had to pay him.

Sanne

We’ve had a similar timeframe, though we were fine with a one full month overlap and proposed a completion date for 19th (October) so we could give notice for 20th October and vacate by the 19th November.

So we paid
- last rent in mid-October for November
- first mortgage in mid-December for December + interest for two weeks in November (we could choose our payment date)

While we didn’t have any money going out of our accounts in November we obviously did have an overlap of two weeks interest + rent and two weeks mortgage + rent.

We moved in after three weeks and had work that would have been disruptive done in the meantime - actually ended up giving our rental keys back a week early in return for not having to clean anything but that’s a different story