Can I borrow from my house to buy before selling?

[Renovirgin2018]

We have been thinking about relocating to be closer to family for a while and have been preparing our house for market. Today a property has come on sale next door to my daughter that would be perfect.

We own our house outright, value approx £425,000. The house we want is marketed at £250,000. It is likely to be snapped up as in a popular area. My house is also likely to if priced correctly.

Can I borrow equity from my house to secure the new home whilst I wait for mine to sell?

Yes, you could take out/increase your mortgage provided you’re eligible for that amount. You could also look into bridging loans if need be.

Are you sure your daughter would be ok with you right next door? Seems a little close.

Possibly but you might pay hefty fees for arranging your mortgage twice. Might be better to look at bridging loans.

You'll still need a proven income I think, could you try a broker?

Why not just borrow the money against the house you're buying? Go with a flexible mortgage and pay it off when house sells?

Open bridging - where you borrow without contracts signed for the sale of your house - is expensive and difficult to arrange as the bank can't quantify when it'll be repaid. Better to remortgage your current house for the full amount and then repay when you sell. There will be legal fees and make sure the remortgage has no redemption penalties built in.

You would then have to settle your mortgage and face any penalties. And if you qualify for a mortgage on your own home, why not just get a mortgage on the new one and get a personal loan for the deposit of you don't have enough cash?
I also would not want my parents living right next door!

Have an honest discussion with your daughter first.

As much as I love my mum, unless she needed to be next door (as in needed help) then I would not want her living next door!

In the same village would be a tad too close even.

But yes, you can arrange finance to do it.

I'd love my mum to live next door (so would older grandkids and husband). Different horses for different courses.

Why can't you put your house on the market and run the sale and purchase at the same time? The banks are very busy at the moment so you won't get a quick approval for any new loan anyway so you might as well put your house on the market instead?

Yes you can get a mortgage on the new house with the existing house as a guarantee. You will need one without early repayment charges so when your house does sell you can pay off the mortgage in full.

Bridging loans don't exist anymore.

We looked into getting one and they are now "banned". I have no idea why. The only option is to remortgage your house, and the new rules for remortgaging are totally draconian.

You will be subject to the same "stress test" for the loan, meaning that you will have to show that you are able to repay the mortgage if it were to go up to 8%. You have to have a repayment mortgage as the banks will no longer consider interest only.

We have just been through this whole process and were quite shocked at how the market has changed.

Try Nested, this is basically what they do. They guarantee X amount out of a sale which they give you basically upfront and then market your property for you. It's a secured loan on the property but it's a good way to move forward quickly. There are fees but I suspect they aren't much more than an old-style bridging loan would have been.