Putting in offers on homes whilst waiting for funds...

leamingtonspaceman

It's a long time since I've been looking at buying houses as I've been renting for many years.

However, my fiancée has inherited £200,000 from her father, £100,000 of which she has and the other £100,000 under probate. She lives with her mother who owns the house they live in. That is for sale and a 'cash' offer of £830,000 has just been accepted. My fiancée will receive £275,000 of this.

So at present she has £100,000 but after probate is completed and her mum's house sold, she will have around £475,000.

She wants to buy a house for around £350,000, but wants to start making offers as soon as she can as once her mum's house is sold she will be effectively homeless. She can't move in with me and doesn't want to get tied into a rental property.

Given these circumstances, can she realistically start to make offers based on a set of circumstances that haven't actually transpired? Or does she have to wait until she actually has the funds?

Really appreciate your help and advice.

Thank you...

Brie

Any reason she can't apply for a mortgage as well which she could then pay off if the timing on receiving the money isn't perfect?  Given that house sales can take months there's no knowing when mom's house will sell and finance's dream house purchase will complete.  Chances are the stars will not align perfectly. 

If she has the income to cover the £300k mortgage then this with her substantial deposit would put her in a great position to buy something, give her extra for the various bills associated with a purchase.  And when she gets the extra from mom's house she can clear her mortgage immediately or in chunks that wouldn't attract a penalty.  

Jemma01

If she has 100k and she wants a house for 350k, can she get a mortgage for 250k?

lisyloo

Regarding one house purchase being dependent on another, people do it all the time, it’s called a chain.
is the £275k a gift from her mother?
She may find it difficult to prove this money is hers during the chain and estate agents will want to do due diligence to make sure she can buy the property she’s making offers on.
does she own any part of that house? 

If not how will she prove the money is coming her way?

leamingtonspaceman

Thanks for your replies so far... really appreciate it.

She can't get a mortgage as she's not working because she's her mum's full time carer. She won't be once her mum sells the house though.

I did think it would be considered a chain with one house purchase being dependent on another, as is common.

Would a letter from her mother stating her intention to gift her the money be enough to demonstrate she will have the funds?

Her mum has just accepted a 'cash' offer for the house they both live in, but that's now subject to the checks regarding the source of the funds. But seeing as it is a cash sale then things should move pretty quickly.

I can't get a mortgage either for various reasons so it's all down to her really.

When the house she lives in with her mother is sold, the money will be split three ways. Her mum will keep a third, a third goes to my fiancée and a third to her sister, so around £275,000 each.

What if her mum signed over the ownership of the house to my fiancée and then she gifts the money back to her mum and sister once the sale is complete?

eddddy

Typically, the process works like this...

• Assuming your fiancée makes an offer that is accepted...
  

• The estate agent will do a financial appraisal of your fiancée - to make sure she has the money and is proceedable

• The estate agent would then give advice to the seller. The advice might be "Everything seems good" or "Leave the property on the market until the buyer has the actual money in the bank" or something else

So it's a matter of things like:

• How effectively your fiancée can convince the estate agent that she'll be getting the money soon

• How popular the property is. If there's a queue of people making offers the estate agent might advise going with the "safest bet" (which might not be your fiancée). If your fiancée is the only person interested, the agent might be more positive about going with your fiancée.

The estate agent will probably have heard lots of prospective buyers say:

• I'm expecting an inheritance (but it never arrives)

• A family member is going to give me some money when they sell their house (but the family member has different ideas)

So you might need to do a bit of convincing.




Edit to add...

leamingtonspaceman said:

Would a letter from her mother stating her intention to gift her the money be enough to demonstrate she will have the funds?

It's up to the estate agent.

Assuming the estate agent is happy with the letter, they would probably then contact the mother's estate agent to get confirmation that the sale is progressing.

Millsandovis

It’s all down to the estate agent convincing the vendor you’re viable really. Also depends on the area the mum’s house is being sold in, the area you’re buying and how long any house she wants to buy has been on the market 

edit: as said above much more in depth 

leamingtonspaceman

Thanks for the advice.

It's all useful and helps a lot.

Herzlos

It could take months to arrange a house sale, but it could take years to sort a messy probate.

There's no harm in making a bid with the details up front; that you've got £100k now, will get £275k when a house sale completes and you can mention the £100k probate if you want.

Has the mothers solicitor given you any rough timeline on when the  house sale will be completed and the funds available?

leamingtonspaceman

The probate should be completed soon.

The offer on her mum's house was made and accepted yesterday after its first day on the market. They had fourteen viewings on the first day! It's a 'cash' offer so checks have to be made regarding the source of the buyers funds, anti-money laundering and all that.

Not sure how long a cash sale would take once those checks are made?

RHemmings

If the probate will be completed soon, then surely that means that there isn't long to wait. 

An alternative to directly making an offer immediately is to tell the estate agent that they are interested in the property, but it is reliant on receiving the funds. Then asking 'would you like an offer and to start the purchase process now, or should I wait?' This will discover what the EA thinks, without having an offer refused due to the funds not yet being available. Which might make the EA take you less seriously in the future.