How do I fund my next home

melipona

I am currently living in accomodation provided by my current employer although I own 2 houses which I rent out. House #1 all paid up, worth £150.000 has been rented out almost continous for the last 12 years, bringing in £600 pcm. House#2 worth £130,000 still has £80,000 on the mortage rent is £500 pcm
I have savings of £60,000 that is readily realisable. Am due to leave current employer in next 6mths, and will get £90,000 golden handshake.

I already have an offer of employment circa £50k pa but will need to relocate and will lose my current home.

I intend to get a property £300-400,000, what is the best way to finance this. Assume that I will need funds for new house some 3 mths before golden handshake is delivered. Willing to sell house #1 but would like to keep house #2.

The difficulty I see is that I would have to declare my impending job change to any lender and may be seen as too high a risk, I am as certain as I can be that the new job will happen.

Any advice appreciated.

dwsjarcmcd

I would be tempted to go into a short term rental. There are several advantages that I can think of. Firstly you will start with your new employer and after, say 3 months you would be able to get a mortgage as normal (although you could apply earlier than that) you will be able to scout round your new area without overly panicking about where you are going to live, and learning about the area. Your 90k should be through so you should easily get a mortgage and finally you wouldn't be 'forced' to sell either of your houses, if you don't want to. With the income your getting from them , they should help your case anyway.

Dr_Tom

Dws is probably right, but it also occurs to me that you should check the relocation package that your new employer is offering, as that might well cover the estate agent and convenyancing fees of moving house, something that you would lose if you didn't take it up straight away.

herbiesjp

Whilst you can raise some extra deposit form your current BTL properties - it will depend on what your current earnings are as to how much you will be able to borrow to make up the difference

melipona

Thanks for the replies. Herbiesjp, currently on 45k, I dont mind selling house #1 as have made a significant capitial gain which should not be taxed as it is classed as my main residence so I want to keep this simple with the IR folks. #2 is on a long term let and ticks over nicely and is a pension cushion. The new job is unlikely to come with a relocation offer, but hey I will ask anyway.
I wondered about using a lump of capital 60k + 150k as deposit ( >50%) and borrowing the rest with the intention of cutting the loan as soon as the 90k arrived. house #2 sort of balances out but I did wonder about rasing additional capitial against it.
I think that what I need is to sort out a lender against a loan upto another 200k who would let me pay 90k back without hassle, any thoughts? A short rental although still a viable option seems like poor use of my hard earned money.

dwsjarcmcd

As to your last point about the 200k mortgage, reducing when you get the 90k, the best option may be an offset mortgage because of the lack of ERC's. That way, you could put the money in the savings account if you want, reduce the lon if you want or remortgage.
The alternative is a fixed or tracker with no ERC's or where you can bring the loan down to a minimal figure, but they are getting harder to find.

Ian_W

dwsjarcmcd wrote: The alternative is a fixed or tracker with no ERC's or where you can bring the loan down to a minimal figure, but they are getting harder to find.

There aren't too many. If you decide this route probably worth looking at the Coventry HERE.
It's 5 yrs fixed FLEXX mortgage at 4.85%, about £500 set up fees but NO early redemption penalties either for overpayments or leaving altogether during the fixed period, as I understand it.

Have no connection with them other than as an existing customer considering this product, but it's probably worth a look if you don't want to go offset.

herbiesjp

Melipona

So worst case scenrio is you have a deposit of £210k and need a loan of £190k.

There are indeed flexible rates, as well as fixed rates, that will allow you to go that high, and also pay the £90k in without penalty

melipona

Thanks for the advice.

melipona

Thanks for the advice.