Mortgage Options on 2nd Home

Dirkie29

I am in a position whereby we have found a house in an area we want to move to but may need to buy this before our existing property has been sold....my current home is mortgage free valued at >£300k and the house we are looking to buy is £225k as we are downsizing.....what is the best option on a mortgage to bridge the time gap so we dont lose the property we want to buy?????
We have capital to fund up to 25% of the purchase price of the new property and I am employed with a decent income....

K_S

@Dirkie29 With a 25% deposit, plenty of lenders will be willing to consider lending on a 2nd residential home (with the existing property in the background) as long as you can meet their affordability calculations, etc. With your current home being mortgage free, that further helps with the affordability calcs as the "running costs" of the property in the background is lower than if you had a mortgage on it. I hope that helps.

Mickey666

I've done this sort of thing twice, both upsizing and downsizing (financially, not size-wise).

First time (upsizing), I just took out a new mortgage on the new house.  Like you I had a large deposit and a salary enough to cover the new mortgage.  The existing house didn;t really figure in the deal and I didn't sell it for about a year.  This was back in the 90s so the mortgage market was very different than to day, or so it seems reading on here (plus there were no SDLT 'penalties' for owning two houses).

Second time (downsizing), I re-mortgaged my current house for about 1/3rd its market value for a flexible 'drawdown mortgage' with Northern Rock.  Not only could I drawdown any amount(s) up to the total mortgage value but, crucially, I could also pay it back at any time without penalties.  This allowed me to buy the new house in cash without selling the current one but then totally repay the mortgage when I sold the current one.  This was back in the 00s, and again I suspect things were different back then (certainly Northern Rock didn't fare well!).  I don't know if 'flexible drawdown' mortgages are available today.

What I'm really saying is that these sorts of things can usually be done, it's just a way of finding the most effective method for your specific requirements.  I'd suggest talking to a broker, explain what you're trying to do and see what they can offer.

If you can afford such things, it can be a very low-stress way to move home in terms of chains etc.

dimbo61

Northern Rock is long gone along with flexable drawn down mortgages.
Now you could look at Offset mortgages where you put down your deposit and take out a mortgage.
You will have to pay 3% stamp duty which you can claim back once you sell your existing home within 3 years I think ( please check yourself )
Once you have sold your existing home you can fully Offset the mortgage till the fix rate period ends and you can clear the mortgage.
Any extra money can be invested in what ever you want.

dimbo61

https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties