Is this crazy?

JIL

I have just seen a fabulous house, perfect for our retirement which is likely to be in two years.
We do have some savings which we could use to fund part of the house and we have £20,000 outstanding on our existing mortgage.
Would it be crazy to make an offer on the house, and take out a mortgage, do a few months work on it and move in and at that point put our current home on the market? I know I will have the tax to pay and claim back. However there is a lot of interest in the house for sale so if we are going to stand a chance we will need to move fast.
Any advice appreciated.
The numbers are house for sale at £240,000
Deposit available £90,000
Current house value £185,000
Outstanding mortgage £20,000

letitbe90

I wouldn’t say it’s crazy, finding a house you really like is hard to come by so it is only normal to want to secure it when you see it even if you weren’t planning to, or have to go through some inconvenience.

That happened to me recently where I wasn’t set on buying a house this year, just having a look around - and then I saw a house which I fell in love with and are nearing exchange!

JIL

letitbe90 wrote: »

I wouldn’t say it’s crazy, finding a house you really like is hard to come by so it is only normal to want to secure it when you see it even if you weren’t planning to, or have to go through some inconvenience.

That happened to me recently where I wasn’t set on buying a house this year, just having a look around - and then I saw a house which I fell in love with and are nearing exchange!

Thankyou, I'm all over the place I can't stop thinking about what to do.

Tom99

I would quickly investigate whether the mortgage you need is possible given your age and that you will not be selling your current home to fund the new purchase.

JIL

I can get the mortgage. I can have £240,000. I did investigate that.
Thankyou for your reply, I should have mentioned that in my op.. I may yet change my mind about retiring I would be retiring relatively early if I do go in two years

Davesnave

The level of craziness depends on how difficult finding a comparable house might be.

There are people on this forum who seem to think it's easy to replace one house with another, but only you understand the implications of your key criteria. Any house can be altered, but its location, aspect and extent is fixed. Something like a special position may add considerable pleasure to daily living.

I'd only caution against having an idealised vision of retirement. Buying something suitable for someone older and less active could be worse than a purchase which requires work for years to come. We did the latter and enjoy it, despite the difficulties, because one doesn't magically change into someone else when the day job stops.

AnotherJoe

Where does the craziness come from? Seems like a rational decision to me, assuming this house is a rare one (position.. layout?) and the fact you might be retiring in two years doesnt seem especially significant especially if you could move into it in a few months anyway rather than not until you retire . What do you mean by it being perfect for retirement?
You should see a mortgage broker because it might be you get a better deal by paying off your current mortgage first rather than running two at the same time, and some lenders might think you are surreptitiously trying to get a BTL mortgage on the cheap so a broker may help there.

AnotherJoe

P.s you could argue it would be crazier to wait until you retired when presumably you'd have less income, less ability to raise a new mortgage and might have to get involved in a chain to buy your "retirement house" making it harder not easier, and less certain you could buy your desired house.

AdrianC

JIL wrote: »

I have just seen a fabulous house, perfect for our retirement which is likely to be in two years.
We do have some savings which we could use to fund part of the house and we have £20,000 outstanding on our existing mortgage.
Would it be crazy to make an offer on the house, and take out a mortgage, do a few months work on it and move in and at that point put our current home on the market? I know I will have the tax to pay and claim back. However there is a lot of interest in the house for sale so if we are going to stand a chance we will need to move fast.
Any advice appreciated.
The numbers are house for sale at £240,000
Deposit available £90,000
Current house value £185,000
Outstanding mortgage £20,000

No, it's not crazy at all.

In many ways, it makes a lot of sense. You can do the work to the newly purchased property without having to live around it, and you can schedule your move at leisure.

So long as you're happy to fund two properties simultaneously - and remember that buildings insurance is wary of properties that are empty for extended periods - and understand the SDLT implications, there's zero reason not to do it that way.

Albala

Practically, it makes a lot of sense. And you are separating buying and selling, which makes you less vulnerable to people playing games with you.

OTOH, the tax situation could be pretty complicated, especially if you plan to use pensions to provide some of the money, and could even include some capital gains. Do take proper professional advice. You would also be stung for extra SDLT as a second home for a while and you have a time limit for selling the current house if you want to claim any of that back.
It also depends on your job security, which only you can assess.

ognum

I would do it, it makes you a very favourable buyer. You can then make your current home really attractive if you can de clutter to the new house.

You have 3 years from completion of the new house to claim back your extra stamp duty.