Second home using equity from first???(7 Posts)
We have £5K left to pay off on our mortgage. We also have plenty to finish off DIYwise ( nothing very costly) following some big renovations we have recently done. Therefore its not an ideal time to sell. Add to this the fact that the market is SLOW where we live, and houses take months if not years to sell.
But we've happened upon our perfect home! It's got no chain, owners are desperate to move and we could get a real bargain, and a gorgeous home. Our salary is more than enough to cover the £275k mortgage.
So we'll just get a new mortgage for second property, we thought. Do some minor renovations to new property before moving in (staying in existing house). Move in and finish off renovations on first house, and then put on market and eventually use proceeds of first sale (c £150k) to pay off good bit of new mortgage. We have approx £20k savings which could be put towards deposit, but preference would be to use equity from first property if at all possible.
However, on ringing mortgage companies it all seems verrry costly and verrrry complicated. Deposit will apparently need to be 15-25% as it is for a second home (this is way beyond what we were expecting or what we can afford - £45k+), there is no way to use equity and if anything we are being penalised for having 150k tied up in property ( which we had thought would be seen as a good thing!).
We have obviously been very naive about the financial position. Does any one have any advice or options? We can get current house on market asap, but I would eat my hat if it sells in time (if at all given the state of one or two rooms coupled with the local market) to give us a chance of getting the property we love.
How good a state is your home in? Can you get a BTL mortgage on it and let it out in order to buy the second house?
We were thinking about this, I called a mortgage broker who actually made it all seem doable. We would have had to switch mortgage on current property to a new deal in order to release the equity and then get a separate mortgage for the new property. Our plan was to then rent out our current place. Although, our situation also slightly different in that I was planning to release equity to help stump up a much bigger deposit for 2nd property (about a 45% deposit).
The brokers I spoke to who were really helpful were London & County (after reading some recommendations on here). Might be worth trying them, or another broker?
We did this, for various reasons. We had to have 25% deposit, and it took us years to save up, but we managed it.
We hadn't quite paid off the first one, so we got a BTL on that one, and ported out mortgage with existing T&Cs to new property. We had to get that one ready to rent pretty sharpish.
If it's going to cost you that much, would it be better to put current one on at a bargain price, hoping for a really quick sale?
That said, as we had to wait, lots of absolutely ideal houses came and went before we bought the one we're currently in. Prior to this, I was petrified that every one we saw would be the only 'ideal' house... but in fact, lots of houses are ideal in some way, and it was fine.
Lalalonglegs we probably could. Although I'm confused by buy to let and let to buy. We'd prefer not to though.
Thanks City, maybe I'll give the brokers a call.
Just to warn you, the calls will be lengthy, as all the mortgage companies will put you on to their underwriters to explain each time...
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