Mortgage advise - buying before selling

BuzzyBeeM

Hi,

I'm in the lucky position of having inherited some money (a bit less than a house worth) from my grandmother. This means I can buy a new house before selling my existing flat - good news as my flat needs a bit of work done first. I currently have a mortgage (approx 30% LTV) on my existing flat.

My question is: Am I better to clear my mortgage and take out a bigger mortgage on my new house, paying it off when my flat sells, or am I better taking out a smaller mortgage on the new house and continuing with the existing mortgage as well.

LTV on new house would be approx 40% or 60% depending on which option I chose. Total borrowing would not exceed 3 times my earnings and I am can cover additional payments from my income, plus the additional insurance and council tax. My flat should sell quickly - it's mirror image next door sold in a matter of days 3 months ago.

I have an agreement in principle in place for the total borrowing, but based on the sale of my existing house and having less cash in hand.

I'd appreciate advice on which is most likely to meet my bank's approval (Nationwide - who I am happy remaining with).

Thanks

BuzzyBeeM

For clarity - work on flat is decorating and some minor repairs - just much easier to achieve when not lived in! It should be marketable within about a month of the purchase of new house.

Thrugelmir

If your flat will sell quickly. Then seems best to do this first. Avoids the neccessity to pay a large sum in second house stamp duty and the costs of running an empty property.

Will you recoup money spent on the flat to enhance it ? Everybody's taste differs. If the work is cosmetic. Likewise the new owners may wish to change the layout.

BuzzyBeeM

I’ve had an offer accepted so will be doing it this way round no matter what! Unfortunately no one is willing to accept offers conditional on a sale round here at the moment.

I’m in Scotland so slightly different system and thankfully I can recoup the additional tax as long as I sell my flat within 18 months.