Buying without selling and other things

Victorwelldue

Resident in Scotland, 50 years old, single with no dependents, no debts, good credit history. 

For various reasons I would like to buy a new property then sell old property only after I've moved into new property and would just like a sanity check to see if feasible or if I've missed anything.

Current property owned outright, value approx £85K to £100K.
Looking at new property in the range of £180K to £200K
Deposit £120K so will be looking to borrow between £60 to £80K
Budgeting for up to £20K upfront costs; LBTT, solicitor fees, new bathroom/kitchen etc if needed  

Once moved into new property I would sell old property and pay off mortgage or possibly wait until after initial term dependent on ERCs etc. I would also claim back LBTT after old property sells.

From reading another thread on here I understand affordability of owning two properties can be an issue for lenders and this is one of the main things I want to check. I earn £60K basic and can receive bonus between 5K to £15K on top (not guaranteed) but my take home is only around £2K per month due to pension contributions. I estimate my max monthly outgoings once in new property would be around £1500/month then there would be the mortgage payments on top plus other expenses of temporarily owning two properties such as insurance, council tax etc. However I will also have around £30K to £50K savings at this point.

So on affordability my question is: Do lenders take into account savings and fact that pension contributions are voluntary?

Due to my age may need to be a shorter mortgage of say 18 years but almost academic anyway since plan to pay off once old property sells.

If this plan is doable then the way I see it is that I may ultimately end up paying a few thousand more than if I were to be in a chain but this is a price I'm willing to pay in order to avoid being in a chain.

So is getting a loan feasible? Anything I've missed? I guess my other main concern is that existing property takes too long to sell. Its a good condition flat (no EWS1 concerns) in good area but property sales a bit slow round my way at present but I guess it would sell eventually for right price. Finally I assume CGT wouldn't come into play in such a scenario?

K_S

@Victorwelldue Just skim-read, I don't see you having a sigibifacnt issue borrowing 80k at low LTV, based on the limited info in your post.

Thrugelmir

Victorwelldue said:

From reading another thread on here I understand affordability of owning two properties can be an issue for lenders and this is one of the main things I want to check. 

You'll only have one relatively small mortgage to service though. In addition to the standing charges on your current property. 

Victorwelldue

Thanks for the responses. I guess my main concern was although my headline numbers seem OK, in reality there will not be much slack after pension contributions taken into account when comparing actual net income to monthly expenses for the duration I would have the mortgage, which is why I was wondering how lenders view both pension contributions & savings.

So one more quick question in this case: Is it one for a broker or straight forward enough that I just go out and find lowest interest rate with no ERC?

K_S

Victorwelldue said:

Thanks for the responses. I guess my main concern was although my headline numbers seem OK, in reality there will not be much slack after pension contributions taken into account when comparing actual net income to monthly expenses for the duration I would have the mortgage, which is why I was wondering how lenders view both pension contributions & savings.

@victorwelldue Sorry, I should have expanded a bit more. The pension contributions as described should not be a showstopper with regard to affordability with the right lender.

jennifernil

Remember that you only get 18 months from buying the new property to sell the old property if you wish to reclaim the additional 4% LBTT.

enthusiasticsaver

Given you do not have a  mortgage on your existing property and will only be looking at a small mortgage on the new one with a substantial deposit and a high enough salary to mean affordability is not an issue you should be fine.  

Victorwelldue

Thanks all. I did originally think should be fine but then you start to get the nagging doubts so always good to come here for a sanity check.
@jennifernil Yes aware of 18 months limit and that is a bit of a risk especially when things are slow as they currently are in my area but hopefully can get it done in time. 

Thrugelmir

If cash is tight. Reduce your pension contributions for the duration. 

Victorwelldue

Thrugelmir said:

If cash is tight. Reduce your pension contributions for the duration. 

I'll have savings to fall back on so hopefully wont need to do that. I was more worried that the lenders will think cash is tight which is why I was wondering if they take the savings of borrowers into account.