Buying new house before selling current home

TrueHammer

Hello Forum

I have recently recieved an inheritance of £190k my current mortgage is £100k (fixed for 6yrs at 2.7%) and has a 3% early repayment charge. My current home is worth around £300k but needs some work to realise its full market value.
Due to medical issues its going to be very difficult to do up the property whilst living in it.
We have seen a property which is £375k and are weighing our options. 
option 1, pay off mortgage on current property, then the remained down as deposit/stamp duty on new house. Then do up old house and sell within 9 months to avoid capital gains and get some stamp duty back. This is my current fav.
option 2, use £170k as deposit on new house and keep £20k back to pay the new mortgage, whilst i do up old house and sell it etc. Not sure mortgage company will go for this one.

I have also considered keeping old property and renting it out but i dont feel it would generate enought o offset the increased mortgage on new property.
Also I have read about bridging loans, but i dont think my nerves could take the risk.

Are either of those option viable or is there another way forward?

Thanks

Mark_d

Neither of those options look attractive to me.  The first mean paying and ERC as well as giving up your cheap mortgage borrowing.  The second means paying additional stamp duty on the second home and also a much higher mortgage rate.

You're in no rush to move house, so I would look at putting the inheritance into savings/investments.  You can always revisit the idea of moving house in 6 years time

TrueHammer

Mark_d said:

Neither of those options look attractive to me.  The first mean paying and ERC as well as giving up your cheap mortgage borrowing.  The second means paying additional stamp duty on the second home and also a much higher mortgage rate.

You're in no rush to move house, so I would look at putting the inheritance into savings/investments.  You can always revisit the idea of moving house in 6 years time

ideally we need to move in the next 12month due as eldest is due to go to high school and we want to move intoi the catchment area of a better school. Our nearby schools are all a bit rubbish.

Mark_d

Maybe sell your current property and port your mortgage to your new home?

Keep_pedalling

You are going to have to spend money to maximise value and chances are you won’t increase the value beyond what you have to spend. I would not go beyond a fresh lick of paint.

redofromstart

I spoke to our mainstream bank mortgage providers about remortgaging the house we lived in to buy a second property (with the intention of refurbishing the in mortgageable one we wanted to buy) and they were absolutely fine with it and made a formal remortgage offer. I didn't mention that we intended to sell the current house and clear the mortgage a year or two down the line.

We had sufficient equity in the current place to keep the mortgage at 60% and I had the income for the amount we wanted to borrow. They did take into account two lots of council tax etc for affordability checks.

we didn't go ahead but it was possible for us to do without it a bridging loan.

TrueHammer

Keep_pedalling said:

You are going to have to spend money to maximise value and chances are you won’t increase the value beyond what you have to spend. I would not go beyond a fresh lick of paint.

Your right, i was only planning on a fresh lick of paint. But it really needs that lick of paint. I'm also worried the medical equipment we have to have in the house would put off potential buyers.

Bargainhunter30

I would consider getting your house valued as is, many people can overlook what needs doing and will want to put their own mark on a property. 

Porting your mortgage at that interest rate would be amazing for you. 

I'd be wary of taking on a second property with all the expected renting changes coming.