Buying Your New House Before Selling Your Existing House - Financing Options?

Angel52

I'm after some advice and guidance please from those of you with far greater knowledge than I!
Our house is currently on the market and we are moving to a new area where housing is in short supply and going fast, and we have seen a house that we really want, and we would like to buy it before our current house actually sells, to secure it.

We are downsizing and we have a lot of equity in our house, with only a very small mortgage left, which will be cleared by the move. I naively thought that we could raise a larger mortgage/get a further advance to buy the new property (either a tracker without redemption fees, or standard variable rate mortgage) and then pay it off once our current house is sold. I realise that we would have to pay an extra 3% SDLT which we could then reclaim, but that is fine. However, this appears not to be possible, given our intention to pay the mortgage off fairly quickly. 

I don't really want to go down the potentially expensive route of a bridging loan, and so I wondered if anyone had any similar experiences or suggestions at all?

Thank you for your help.

AdrianC

So, umm, just tell the remortgaging lender that you want to release equity...

There may be an early redemption charge, but there might not be if you pick your lender carefully.

Slithery

Sell you current property and then move into rented before starting to look for your new one.

Angel52

Thank you for your replies.

Can I release equity though on a property that is currently up for sale? Also, can I then pay off the newly increased mortgage when it sells, hopefully within a year or less? It's the short term nature of the 'loan/mortgage' that seemed to be the issue?

And thanks Slithery, but the point is that we want to secure a particular house that is on the market now and likely to sell quickly.

AnotherJoe

Slithery said:

Sell you current property and then move into rented before starting to look for your new one.

Lol
person : how can I do X which I've already started?
internet : do Y and forget X

OP did you work out the costs of a bridging loan for say 6 months and then compare with selling your home cheaper to a cash buyer?

davidmcn

Are no lenders willing to provide a standard mortgage, taking into account the costs of still having the "old" property and mortgage? I've certainly overlapped them in the past, though admittedly a long time ago and with an already concluded contract for the sale.

Thrugelmir

Bridging loan seems the solution. If speed is of the essence. Mainstream mortgage lenders aren't going to be interested in releasing equity for a matter of a few months. 

Angel52

Thank you again, yes I have looked into a bridging loan but as it is a fair sized temporary mortgage required, the associated costs are not as small as I'd like! But, I can understand why a long term lender wouldn't be interested, I was just hoping that maybe someone on here had been in a similar situation and had found a mortgage lender willing to lend, or a better, cheaper solution, always worth asking!!

Kaz1000

You can get a mortgage for the new property but clearly state that you do not know what you want to do with your current property. You will have redemption charges but it is way cheaper than a bridging loan. Also not to mention if your house takes a year to sell, the mortgage is much cheaper although you will be paying two sets of bills. As long as you pass the affordablility checks, you will be fine. Do not mention you intend to sell your house immediately to pay the mortgage off as the selling of a property is not in your hands but the buyer. Good luck