Best way to pay for a house?

Sapindus

When my solicitor wanted bank statements to prove I had funds, I had to provide statements going back 6 months I think.

Also slightly concerned that your seller had the house "on the market" but has taken it off so you can do a private deal - their estate agent may well want their fees and say that you had seen the house was on the market because of their advertising or For Sale board.  This is more a problem for your seller, but if the agent gets insistent with them they may want to increase the sale price accordingly.

housebuyer143

dgaf said:

silvercar said:

In my experience of solicitor’s AML checks, if you showed evidence of your savings and investments as proof you can afford the property, they would be satisfied. They then tell you their account number to transfer the money into. As long as the money comes from an account in your name they are happy.

This leaves you open to get the money from whatever source you like, as long as it goes through an account in your name. I know this makes a mockery of the rules and checks, but it seems to be how solicitors operate. You’ve proven you have the money, you’ve showed the source is legitimate, you’ve paid the money over from your own account and that seems to be enough boxes ticked that solicitors are happy to proceed. I guess there are only a small percentage of people that would have their own money and not use it for the purchase and so it’s a risk that they take. 

That is a good idea, thank you. My only concern is would they not want to see my bank statement to prove that the money I transferred to them for the property purchase did indeed come from my own savings and investments?

When I borrowed money from my mum the solicitor wanted an AML check and her statements going back 6 months to track the money, same as what she wanted for me. 
I haven't known of a solicitor yet who just takes your word for where it came from without scrutinizing your bank statements. 

bobster2

Errr...the most obvious option - mortgage.

A conventional interest only mortgage on the new property. Interest rates will be much lower than a bridging loan - and lower risk if your existing property takes some time to sell. Shop around for the one with the lowest early repayment charge and/or the shortest tie in period. This may work out cheaper than some other options.

BTW - not sure why it's relevant that your current home is freehold (vs leasehold).

dgaf

anselld said:

You could transfer your ISA to a flexible ISA provider which would allow you to remove funds and then replace them within the tax year.  Good timing for that right now as it would give you the best part of a year to replace funds if you draw after 5 April.

If I transferred my ISA to a flexible ISA provider, would I be able able to replace all the funds I remove from the flexible ISA back into ( same tax year) it?

Bigphil1474

As bobster says, why not just get a mortgage? if your current home is mortgage free, re-mortgage that to purchase the new house. So much easier than faffing around borrowing from half the town. Go speak to a mortgage broker?

anselld

dgaf said:

anselld said:

You could transfer your ISA to a flexible ISA provider which would allow you to remove funds and then replace them within the tax year.  Good timing for that right now as it would give you the best part of a year to replace funds if you draw after 5 April.

If I transferred my ISA to a flexible ISA provider, would I be able able to replace all the funds I remove from the flexible ISA back into ( same tax year) it?

Yes you can remove most of the funds (leave enough to not force closure) and you can then replace those funds within the same tax year whilst still retaining your normal allowance. 

dgaf

anselld said:

dgaf said:

anselld said:

You could transfer your ISA to a flexible ISA provider which would allow you to remove funds and then replace them within the tax year.  Good timing for that right now as it would give you the best part of a year to replace funds if you draw after 5 April.

If I transferred my ISA to a flexible ISA provider, would I be able able to replace all the funds I remove from the flexible ISA back into ( same tax year) it?

Yes you can remove most of the funds (leave enough to not force closure) and you can then replace those funds within the same tax year whilst still retaining your normal allowance. 

Thank you very much for this.
It was something that I had overlooked (but have today read up on flexible ISA's), thinking that I would be losing the tax free status of my ISA money. Now I can place mine up for sale and hopefully it will sell and I can just buy the new house with the money from my existing house - but now I can relax a little knowing that I have the flexible cash ISA route (along with other savings in my own name) to pay for the new house if all else fails, and I can always repay the money back into the Flexible ISA - which should make it straight forward completing the purchase as I will not be relying on others to loan me the money and then for them to supply statements.

eddddy

Emmia said:

How are/were you aware the house is for sale?

If you saw a board, then the seller will almost certainly still have to pay the fee to the agent as they'd argue they introduced you via the medium of the for sale sign - so don't expect a discount from the seller just because the agent didn't show you round, or isn't otherwise involved.

Just jumping back to this comment - because it might mislead people reading this thread.

Seeing a board isn't an "introduction" - so that's not relevant. This has been established by the court of appeal and confirmed by the Property Ombudsman.

dgaf said:

The owner told me they have put it up for sale.

The OP hasn't clarified whether the seller has a current contract with an estate agent.

If they have, perhaps the main consideration is...

• If it's a 'sole agency contract', then no fee is payable to the agent if the owner finds a buyer themselves

• If it's a 'sole selling rights contract', then a fee is payable to the agent if the owner finds a buyer themselves

(But there may be other factors as well.)

saajan_12

dgaf said:

Hello,

I have seen a property for sale that I would really like to buy. I have spoken to the owners and they will not be moving into their new build for another 5 months, so I time on my side, but...

My current house is freehold and worth more than the one I am looking to buy.
My plan is to sell mine and use the funds to purchase the property in cash.
My worry is that the property may sell before I can get mine sold, so I have spoken to a bridging loan company .... ... ...

Sounds like we're jumping into a ton of gymnastics with bridging loans and 17 friends, before the basics.. 
Option 1:
Why do you think your property will take longer than 5 months to sell? I'd hazard a guess that's longer than the average and new builds are often delayed anyway. Get on the market asap and treat it as a normal chain.. 

Option 2:
Get a LTB or BTL tracker mortgage on your current property and use that to purchase the new property. If its worth at least 25% more and your affordability works out, then it should cover the full purchase price. Then when your current property sells, pay off the mortgage and if its a tracker with no early repayment fees then you're much better off than bridging loans. Also your mortgage interest cost is likely to be less or comparable to the returns your friends would be losing out on while they'd lent the money to you. 

dgaf

saajan_12 said:

dgaf said:

Hello,

I have seen a property for sale that I would really like to buy. I have spoken to the owners and they will not be moving into their new build for another 5 months, so I time on my side, but...

My current house is freehold and worth more than the one I am looking to buy.
My plan is to sell mine and use the funds to purchase the property in cash.
My worry is that the property may sell before I can get mine sold, so I have spoken to a bridging loan company .... ... ...

Sounds like we're jumping into a ton of gymnastics with bridging loans and 17 friends, before the basics.. 
Option 1:
Why do you think your property will take longer than 5 months to sell? I'd hazard a guess that's longer than the average and new builds are often delayed anyway. Get on the market asap and treat it as a normal chain.. 

Option 2:
Get a LTB or BTL tracker mortgage on your current property and use that to purchase the new property. If its worth at least 25% more and your affordability works out, then it should cover the full purchase price. Then when your current property sells, pay off the mortgage and if its a tracker with no early repayment fees then you're much better off than bridging loans. Also your mortgage interest cost is likely to be less or comparable to the returns your friends would be losing out on while they'd lent the money to you. 

Yes I am hoping to sell my property before I buy the other one, that is plan A and is the easiest option.

Borrowing money from 17 friends I agree can be a lot of hassle, as I have found out from people on here and also confirming with my solicitor - who said it can be done but will require 17 AML checks and 6 months of statements from each person loaning me the money. The solicitor told me one of their clients borrowed from 45 people to buy a house and they had to do 45 AML checks on their behalf to get the purchase to go go through.

The bridging loan idea was just testing the water in case all else was to fail - fees and interest will be high.
I have been told that I could go for a LTB mortgage on my existing property, but I don't want to have a mortgage if I can help it (sorry I should have stated 'no mortgage' in my opening post to save any confusion).

What I was doing was to have a fall back option in case my house did not sell, I suppose a case of 'hope for the best and prepare for the worst'.
But thank you to poster anselld, who let me know of something that I had overlooked which was the flexible ISA option. I did have my S&S ISA as the last option to fall back on - thinking if I cashed it in I would lose the tax free status of my investments that have taken a long time to build up. But because of the flexible ISA option by anselld, I can sleep easy now - if mine dose not sell I can sell some shares and transfer the money to the flexible ISA, use it (along with savings in my own name) to purchase the property, and then I will have till the end of this FY to put the money back in to the flexible ISA, then transfer it back to my S&S ISA and re-buy the shares again (even paying the buy and sell fess and SD, it wont be too expensive to do that). I have spoken to my S&S ISA provider and Halifax re their flexible ISA, and I can do it should it come to that.