Buying a house before selling your own - madness?

[penpotted]

Dream house has come on the market. I don't want to lose it but my house isn't yet sold.

I can borrow the 20% deposit for the new home from a family member but not sure if I will get a mortgage on the new place?

I earn £72k, own £119k on current home. Would need to borrow an additional £234k on new place. Not sure if mortgage companies would allow this?

Are there any other cons I haven't thought of (such as a massive property price crash leaving me with less equity and also having to pay two mortgages for a long time?!)

If your income can support the two homes it isn't a problem, but I have some doubt as to whether you would qualify. If you were able to get another mortgage, you would have to be prepared to pay two mortgages for an extended period of time if you were unable to sell your first home. It's a risk, to be sure. You would also have to be prepared for any emergencies such as boilers, roofs, etc.

I think the mortgage will be an issue. Your new mortgage will be contingent on you discharging the current one.

Of course you can ask the question to see if they'd still be willing to.

But ultimately the mortgage application would be different so despite having the deposit you don't meet the terms of the mortgage you have arranged.

A broker will sort you out a mortgage although you'll need one with no early repayment charges and you'll have to pay the stamp duty 3% surcharge

I’m having to do the same thing.

I don’t have the time or energy to get my current house ready for sale. It’s full of shit and too cramped and I’m too busy.

I will have to spend over £10000 on stamp duty though (will sell current home later and hopefully get that refunded if I sell within 3 years). Will have zero in my accounts (and a big tax bill for my SE earnings) if I pull this off, especially with 15% deposit for new place.

Definitely don't get a bridging loan, whatever you do!

Yeah I'm not sure I will qualify - will be nearly 5x income in total mortgaged until current home is sold.

Will speak to broker tomorrow and see what they think.

Early repayment charge shouldn't factor into it as I'll be borrowing the deposit, paying that back to my family member once my house sells and the remaining equity will be used to pay for improvements.

I think total mortgage payments would be around £1500 a month. Hadn't thought about still paying bills on both houses though! Would definitely be tight. Just don't want to lose this house 😩

The bank will want to see where the 20% deposit has come from .... if it's "a Loan" from family, that will be taken into account as exactly that, a loan, so very, very unlikely you'd qualify.
We did the exact same thing, and financed it with a 3 month bridging loan. Cost £24k in interest and early repayment charges but as the new property was such a bargain we just factored that money in. (And it was still a bargain house buy). Good luck xx

Houses near to me are selling before a for sale goes up, make the offer, get yours on the market if you can’t get a second mortgage.

Can you look into a Let to Buy mortgage on your current property? I have no idea what these are but the people currently buying our house have apparently done this!

Have you looked at any of those “we buy any house” type companies? You’d be selling at a loss, but it might be worth it for you if it means you can get your dream house.

Can’t you just offer and then get yours on the market ASAP? We just did this but were ready to go, we’d had our photos done etc when we offered. But the terms of our offer were that it was subject to our sale, and this was done in 2 weeks.

how about reducing the price on your current house? I think I remember from another thread that it's already on the market. The a loan from family to comoensate for any loss due to reduction?

You should be able to get a refund on any SDLT surcharge as this will be your main home.

Impossible to say about affordability without looking at your outgoings, it sounds like it might be tight though. Plus- like someone has said earlier the 20% deposit would have to be seen as a ‘gift’.

You might be surprised at how fast your house will sell. Speak to the estate agent, you may be able to price it lower and aim for a cash buyer.

We put in an offer that was accepted on our current house before our old one was on the market but it was ready to go on the market and we new it would sell quickly. Could you put it an offer and then try and sell yours asap

I’m just amazed estate agents have let you view a property without having an offer on your own.

None of the agents where we are buying (different county to where we live) are doing viewings on that basis so having to wait (not patiently) to sell our house and hoping not to find our dream house in the meantime. Nuts.

We bought our current house and our house hadn't sold. The Estate Agents and seller were quite twitchy but they called our EA who said our house would sell fast and it did within 10 days. We then rented the property as it was vacant which was lucky as it took bloody ages for our chain to complete due to problems with the buyers.

I had to do this not to lose my dream house but was fortune enough to not have a mortgage on my first property.
One big issue might be stamp duty as a second home you won’t get the discount and will have to pay an extra amount this can be claimed back when your sale competes.
The family member you are borrowing Money from will need to provide quite a lot of details.

We did it, kind of.
The property was only accepting chain free buyers. We'd lost out on 3 properties previously to cash buyers so decided we didn't have much choice.
We remortgaged to release enough equity for a 10% deposit. Then consulted a mortgage advisor who got us a second home mortgage.
We ended up with both mortgages for around 3 months, which wasn't too bad. However this was before the additional stamp duty on second homes, which you'd now potentially get stung by.

You could get a second home mortgage to do that but I doubt you’d qualify. Not to mention having pay 2 mortgages and sets of bills etc It’d make more sense to reduce the price of th house you’re selling so that you can move it on.

Why not speak to the vendors and see what their plans are. They may not be in a rush. They may want to downsize/divorce and do a swap.

Start asking questions

@Coriandersucks

I’m just amazed estate agents have let you view a property without having an offer on your own.

None of the agents where we are buying (different county to where we live) are doing viewings on that basis so having to wait (not patiently) to sell our house and hoping not to find our dream house in the meantime. Nuts.

That’s crazy! I think estate agents make a huge mistake by doing this and will stop selling houses. As how can you know what offer you will be able to accept on your property if you have not seen one that you want to buy?

Our house sold in two weeks, by viewing a house before ours sold we were able to accept an offer because we knew it was enough to get the one we wanted. It’s what keeps the market going surely! We are lucky that this has been the advice of both our estate agents and our sellers.

The estate agents of the dream house have advised them not to accept my offer until my house has sold, which is fair enough.

My house is already on the market for 10% less than a nearly identical house around the corner. I can't and wouldn't want to drop the price any lower, because I think it's slow due to lack of mortgage availability to FTBs at the mo. It's a lovely house I think, although I know I'm biased.

Our house wasn’t even on the market when our dream house came up. We’d been looking for years but they wouldn’t entertain our offer until we said we’d rent ours out so there would be no chain.

You won’t be able to have two domestic mortgages and if you do decide to rent your old one out there’s a load of paperwork.

We released money from the old one but decided not to bother renting it out after all and is due to be sold. Early redemption fees are a pain. However, it made the move a lot less stressful. Mortgage rates are so low it can be doable.