Buying house before selling

asyb

Hi All,

Wanted to get some advice on a potential situation unfolding with a house sale and purchase.
Sale agreed for my existing property and offered agreed on a new property.
Agreed Mortgage plus 10% (£40k) depo enough to pay for the purchase. The sale of our property will give us the  £40k required. We also have £40k saved up, so was planning on putting a further 5% down.

My issue is the following, the person I am purchasing from is pushing for a quick sale. This is feasible as I have enough savings to cover the minumem deposit amount of 10%. However I am worried that if we do not sell our property before the purchase, our mortage offer will be revoked as technichally we may have 2 mortgages for a short period of time.

Does anyone have any experiance with the above? If the purchase happens before the sale, will the bank recalculate how much they could lend us? Or will they allow the offer to stand and give us time to complete the sale? To further complicate matters, the property we are selling is on rent, we are on good relations with the tennant and agreed they will leave 2 weeks before completion date. Will this help as the mortgage is covered?

Would appreciate any advice on the above! 

Thank you

hazyjo

You will need to sell before you can buy - unless you can get a bridging loan which is would strongly discourage. They're very expensive and you could end up paying it for months.

Until exchange, your buyer could pull out. Where would that leave you if you had a bridging loan or had completed on your purchase?

Someone else can tell you about stamp duty issues as I'm not up to date with them.

If I wasn't on a mobile I would dig you out a recent thread about why you shouldn't leave the tenants in for that long. It really is having your cake and eating it. They should be out sooner rather than later. I would not start the buying process on a property with tenants in - neither would many others. The tenants have EVERY right to stay, and good relations may not enter into the equation when push comes to shove!

[Deleted User]

asyb said:

Hi All,

Wanted to get some advice on a potential situation unfolding with a house sale and purchase.
Sale agreed for my existing property and offered agreed on a new property.
Agreed Mortgage plus 10% (£40k) depo enough to pay for the purchase. The sale of our property will give us the  £40k required. We also have £40k saved up, so was planning on putting a further 5% down.

My issue is the following, the person I am purchasing from is pushing for a quick sale. This is feasible as I have enough savings to cover the minumem deposit amount of 10%. However I am worried that if we do not sell our property before the purchase, our mortage offer will be revoked as technichally we may have 2 mortgages for a short period of time.

Does anyone have any experiance with the above? If the purchase happens before the sale, will the bank recalculate how much they could lend us? Or will they allow the offer to stand and give us time to complete the sale? To further complicate matters, the property we are selling is on rent, we are on good relations with the tennant and agreed they will leave 2 weeks before completion date. Will this help as the mortgage is covered?

Would appreciate any advice on the above! 

Thank you

Have you actually served the tenants valid notice?  You would be absolutely crazy to exchange contracts on the rental property you are selling without having vacant possession at the time.

 I can't read the T&C from here, is the mortgage for your purchase conditional on repaying the mortgage on the rental property? 

Slithery

Why on earth are you viewing properties and putting yours on the market when you still have tenants? That's a terrible idea, you need to get rid of your tenants before marketing (will currently take between 9-12 months)...

warby68

No you have 2 complex and fraught situations.
You can't have 2 mortgages (unless, and exceptionally, they have been agreed on affordability - the BTL and new one. If, as it sounds, your new mortgage was based on sale of BTL it won't wash. There are no grace periods. You would need bridging finance, rare and expensive and not advisable for most because of the risk of being stuck with both properties longer term.
Secondly you are selling with a tenant in situ. This will rightly put off most buyers. Any informal agreement to leave can't really be relied upon and noone should exchange without vacant possession. Keeping a tenant whilst trying to sell is understandable for the income stream but generally complicates matters, especially now as getting tenants out is a longer than usual process. It is seen as trying to have your cake and eat it round here.

penners324

Not forgetting you have to pay the 3% additional stamp duty on the place you're buying and then reclaim it when your sale completes.

asyb

Hi All,

Thank you all for the advice.
In regards to the tennant situation, to clarifiy,  notice has been served and they will be leaving the property on 10th September. It is planned that exchange will then take place 2 weeks later. The buyer is aware of the situation and has no issues. 
The plan was for the sale and purchase to be timed together, but it is pressure from the house we are buying which is causing me to consider what would happen if we were to try and complete the purchase before sale.

It seems the only option is to stall the property we are buying until our sale is completed. 

eidand

what happens if your tenants do not actually leave on September, 10-th?

asyb

eidand said:

what happens if your tenants do not actually leave on September, 10-th?

Then it is likely further delays and possiblely the loss of the house we are buying.
Initially our buyer was buying the property BTL before changing his mind.
Our mistake was not serving notice on the tennant before the property went on for sale. But we were assured by agents that they had BTL buyers lined up who would snap the house up.
This seemed to be fine until the buyer changing his mind and us having to serve notice. 

foxy-stoat

The person selling will need to adhere to your timescales, or sell to another.