Buying a house without selling

[Tubelight]

We live in London, so house prices are high. We like one house on the right move and can afford easily on our current salaries. In our area bigger houses are still selling fast but ours is a small 3 bed house with a small garden so may take some time to sell. The question is can we use money for deposit from our current mortgage (80% equity)and sell our house later. Would the estate agent take us seriously if our house is not on sell yet.

Where I live, you can't even get appointments to view if you haven't sold or have proof of available funding.
The people selling would not accept an offer if you needed to sell your house and it wasn't even on the market.

I am a bit confused as to what you mean by your penultimate sentence. Even if you have 80% equity (which is great, obviously) you don't actually have that "cash" to use, until your house is sold and you use the other 20% to pay back your mortgage, do you ? Apologies if I have misunderstood what you are suggesting.

We have done this before. You just tell the EA that you are keeping your current house (eg as a rental).

However, if you do intend to sell and use funds from your equity, your finances will be quite complex. You would need a new mortgage that releases funds from your existing house for the deposit and then ports to your new house when you sell. You will need to pass the affordability criteria for both mortgages and it will likely be expensive as you will only need the mortgage to cover both properties for a short period. In short, speak to a broker, or get your house on the market asap.

That would be fine OP, just say you are buying an additional property, just bear in mind the increase in SDLT.

Thank you everyone. We have enough funds for the stamp duty, fees and initial work needed but wasn’t sure if it’s at all possible.

@Roselilly36 mentions SDLT increase - this 3% can be claimed back if you sell your original property within a set time period (which I can't remember what it is right now)

How are you intending to buy the new house - with a mortgage, yes?

So you want to increase the mortgage on your current home (to release equity for a deposit).

Then get a second mortgage too in order to buy the next house.

Unless you are very high earners I think this will be unlikely.

Are you saying you want to increase the mortgage on the current house, to give you the deposit for the second? Then have 2 mortgages running?
Are you looking at renting the current house? At which point you might need a btl mortgage.

DH had 2 residential mortgages for a bit - we sold my house, used the equity for a deposit, then took out a joint mortgage, with unlimited overpayment. We were well under the mortgage multiple offered at the time (something crazy like 5x joint income offered, 3.5x when we had 2 mortgages, and 2x when we sold DHs house). The multiplier offered should tell you this was a LONG time ago!

Yes you can. Just remortgage your existing house on a buy to let mortgage (taking out some of the equity) and use that as deposit for your next place. There is the extra 3% stamp duty to remember.

I did this and it was fine. But do remember if you dont sell your home first you'll have to pay an extra 3% stamp duty when you buy (you can claim it back if you well within three years). But that may be a substantial amount of cash to find.

Just tell the estate agent youre chain free. Dunno how they can check.

If you continue to own two houses, the one you don’t live in will attract CGT when you sell it. Best to know all the tax implications before you do this.

And presumably you’ll be liable for increased stamp duty (which you can pay back) at purchase and CGT on any increase in value of your kin-residential home when you come to sell that.

You remortgage your present home and need to have an idea of what you can obtain, factor in buying costs, the stamp duty is paid early on before the sale, along with any search costs, survey.. You also need to consider two sets of house costs like heating and council tax. The sellers costs of present house come out of the sale price but you need x amount in bank because the date of sale is unknown. It may not sell for months .
You need a valuation first and then a conversation with your lender.

When we bought our rental the EA didn't just go on our word that we were doing that - they actually asked to see bank statements. That said it was only at the point of putting an offer in. They did let us view it first, etc.