Best Way to Borrow Against a Property with No Mortgage to Buy a New Property

HansGruber89

Hi,

If I was to receive a property as a gift (paying capital gains tax) which I own outright, what would be the best way to borrow using this property to purchase a new property?

Say I have a £125K property and I wish to buy another property for £95k quickly, what is the best way to borrow which allows me to buy the new property outright, then sell the previous property later to repay the debt? This is time sensitive, so I can't sell the property first.

Thanks everyone!

[Deleted User]

A mortgage.

bris

You are looking at the sub prime market to get a secured loan, you still need a around 30% deposit and your rates will be high.

An independent financial advisor might be able to help but if you think you can just use the owned property as security without putting anything into the pot, you can't. 

Affordability is still the key, you need a salary to meet the criteria as well as the deposit.

HansGruber89

bris said:

You are looking at the sub prime market to get a secured loan, you still need a around 30% deposit and your rates will be high.

An independent financial advisor might be able to help but if you think you can just use the owned property as security without putting anything into the pot, you can't. 

Affordability is still the key, you need a salary to meet the criteria as well as the deposit.

So would the property itself not count as putting something in the pot? If I can't make the repayments, they take my house which would be worth more than what I borrowed? Or is that not how it works? Is it not possible to take out a mortgage on a property I own which has never had one?

Sorry, completely new to all of this! Basically I have a property I don't want, and I want to use it to buy a property I do want. If I could do it fast enough, I would simply sell this property first, but by that time the one I want will be gone.

Thenonameleague

HansGruber89 said:

bris said:

You are looking at the sub prime market to get a secured loan, you still need a around 30% deposit and your rates will be high.

An independent financial advisor might be able to help but if you think you can just use the owned property as security without putting anything into the pot, you can't. 

Affordability is still the key, you need a salary to meet the criteria as well as the deposit.

So would the property itself not count as putting something in the pot? If I can't make the repayments, they take my house which would be worth more than what I borrowed? Or is that not how it works? Is it not possible to take out a mortgage on a property I own which has never had one?

Sorry, completely new to all of this! Basically I have a property I don't want, and I want to use it to buy a property I do want. If I could do it fast enough, I would simply sell this property first, but by that time the one I want will be gone.

A broker should explain your choices.

A question, when you say time sensitive are we talking days, weeks etc as a mortgage or a secured loan could take an unknown amount of time to get sorted when selling could be quicker.

HansGruber89

I've made an offer on a property which was accepted and was going to take on a conventional mortgage with a guarantor (which remains an option); the plan was to settle up this mortgage once the property is sold, but if there was another easier/faster/cheaper way, that would be great. Looking to sell the property in the next few months. Considered a bridging loan but I've heard bad things about them.

foxy-stoat

Put the £125,000 house into an auction, you will have your money quicker than getting a secured loan.  You will get less than the market value but it was free anyway.

tlc678910

If you do take a mortgage on your property but plan to sell very soon look out for early repayment charges.
Lots of mortgages won't allow borrowing for the purpose of purchase of property*. I think you need to contact a mortgage broker to see if there is anything available that can meet your needs. It probably won't be an average mortgage from a high street bank due to the above reasons.

tlc678910

*Purchase of a different property obviously!!

bris

HansGruber89 said:

bris said:

You are looking at the sub prime market to get a secured loan, you still need a around 30% deposit and your rates will be high.

An independent financial advisor might be able to help but if you think you can just use the owned property as security without putting anything into the pot, you can't. 

Affordability is still the key, you need a salary to meet the criteria as well as the deposit.

So would the property itself not count as putting something in the pot? 

Yes the property is something in the pot but it's not what they will lend on. They still need affordability, thats an income that can comfortably pay the mortgage. The last thing they want is to chase you and reposes the properties only to be then getting accused of lending to someone who could.t afford the payments.

HansGruber89

bris said:

HansGruber89 said:

bris said:

You are looking at the sub prime market to get a secured loan, you still need a around 30% deposit and your rates will be high.

An independent financial advisor might be able to help but if you think you can just use the owned property as security without putting anything into the pot, you can't. 

Affordability is still the key, you need a salary to meet the criteria as well as the deposit.

So would the property itself not count as putting something in the pot? 

Yes the property is something in the pot but it's not what they will lend on. They still need affordability, thats an income that can comfortably pay the mortgage. The last thing they want is to chase you and reposes the properties only to be then getting accused of lending to someone who could.t afford the payments.

I see. So if I am able to make the payments and have a good credit rating (which I am and do), AND I am willing to put a house in the pot owned outright, would that put me in good stead for borrowing using the house as collateral or using it in another way (such as releasing equity etc)?