House Purchase Before Selling Own Home

woodmeista

Hello All

Have recently found a property that we wish to purchase. The vendor has 2 offers one of which is ours.  The property has been on the market for 15 months and the vendor is in a need to sell situation and has offered a 15% discount to any purchaser who can complete within the next 2 months.  We have a property which is mortgage free and which would cover 66% of the purchase price. I am in a stable and secure job and can cover the difference in mortgage but wondered what the best way is to generate a mortgage to cover the purchase in the short term. I would then look to sell my house as soon as possible which based on current market should move quickly.  Not sure if I should look for a secured loan on my mortgage free property or an interest only remortgage on current property plus another mortgage on desired property.  I know I would trigger enhanced stamp duty but can hopefully reclaim that once I've sold my current property.  I am under 55 so not eligible for equity release.  Clear as mud?  Be gentle please if this is simple or I've misposted and I'm happy to provide more info if it helps.

Thanks all.

notrouble

Take out a mortgage for 66% of the purchase price, using a mortgage product that has no (or low) early redemption fee (assuming of course your income meets the mortgage criteria - see online calculators).

Use your savings for the remaining 44%.

Pay the aditoonal 2nd property SDLT.

Sell your current property.

Use the sale proceeds to pay off the new mortgage.

Reclaim the additional SDLT

woodmeista

Thanks. Should have been clearer in OP - My savings won’t cover the difference in my house value and new house purchase price, so I would need a mortgage to service the 34% difference. Appreciate all the other advice.

notrouble

woodmeista said:

Thanks. Should have been clearer in OP - My savings won’t cover the difference in my house value and new house purchase price, so I would need a mortgage to service the 34% difference. Appreciate all the other advice.

Ah! I was thrown by "can cover the difference in mortgage" and assumed with savings.

So either you need 2 mortgages -

*1 on current property for 66% of purchase price and 1 on new property for 34% (well, a bit less - you'll need to put some cash in). But even if your income supports the total borrowed on both mortgage (again, see online calculators), you may struggle to find the 2nd lender when they know about the 1st. Or

* borrow the full amount (say 95%) from one lender (again on a product you can pay down) and then reduce themortgage once you sell. But again that will be income dependant.

Option 2 is simpler, since both options will require sufficient income.