House chain nightmare - are we mad to consider this?!

[Dolly5678]

We’ve been trying to sell our house and buy another for the best part of a year. The chain has collapsed several times and we’ve just lost our current buyer. We were supposed to have exchanged today. We have found our perfect new build home (completed) and really really don’t want to lose it. We also can’t bear the thought of the selling process again knowing we could lose yet another buyer. We have 2 DC under 3 so life is stressful enough and we have really outgrown our house.

Are we insane to consider the following - buy our new property whilst still owning (and paying mortgage payments on) our current property. And hoping we can sell it in a few months. I know we will have to pay a higher rate of stamp duty but I read it might be possible to get some of that back if we sell our first property within a timeframe?

I know financially this is a crap option but emotionally I don’t think we have the resilience to be in a chain anymore. I’ve never been so stressed in my life :-(

Any advice gratefully received.

This is what we ended up doing.
Yes. You can reclaim the additional stamp duty you pay if you sell within 3 years.
All I would say is, it's not necessarily less stressful. We had our first attempt sell fall through. Hoping to soon cross the finishing line with our second attempt. Still expecting smthg to go wrong. It's been almost a year.
So make sure you have the funds to pay two mortgages at the same time, especially with rising interest.

FIL did this due to several collapsed chains and then a probate issue further down the chain but found it much more difficult to get the lender to agree to a second mortgage than when he was initially porting it across to a new property. They assessed how long he could afford to pay two mortgages for plus all of the associated outgoings and so you you would need to be able to prove that you can afford them plus any rising costs.

This rarely is viable but does your developer offer part ex? We live on a new build site and there were a few properties towards the end that they offered very competitive part exchange prices for. It all depends on how popular the development is and how long the house has been completed for with no interest. A long shot I know but thought I would suggest it just on the off chance!

Will your developer not part exchange your old house?

Can’t you get the developer to buy your house? Or use a we buy any house type service? If you’re willing to be in a negative financial position it might be better for the reduced stress to just sell

Well we considered doing it so clearly you aren’t crazy (didn’t get our offer accepted so went back to the drawing board).

presuke you can’t get the developer to accept part ex? That would be your best bet

and as for buying a second house without selling the first, as pp said this makes things much harder wrt to the mortgage. To speak to your lender or a broker before you give it further thought.

I haven’t considered part exchange, it’s a tiny development of 3 houses by a small developer. I will ask them about this, thank you! Yes I need to look at our finances and check we could afford both mortgage payments for a time, I believe we could. And then speak to our broker. Why is buying and selling property so hideously difficult in this country?!!

Last time we bought before selling. You have a set time to sell if you want the stamp duty back, check with HMRC or your solicitor how long to be sure, but you do have to pay it upfront.😬 We did it that way as house #2 needed work doing we wanted to do before we moved in, and for various reasons we did a lot of the moving in stages. And it was a tricky, long-drawn-out purchase for other reasons, so we dared not get into a chain.
We are old codgers and our mortgage was paid up on house #1, so it was easier in a way, but we had to temporarily raid our pension fund/ISAs to buy #2- and beware- you have a set time to pay that back in or there are tax implications, and that's a much shorter timeframe than the stamp duty one.

We did it.
Yes, we got all the stamp duty back (plus a tiny amount of interest).
Double check all the maths - and then check it again. Have you actually got enough cash for deposit, stamp duty, fees, and then enough income to support 2 mortgages - plus 2 sets of council tax. Gas/electricity was tiny, but still needed standing charges paying.

We also needed to visit the house every week to keep the insurance valid.

It was pretty stressful - but worth it. We are now using (some of) the equity from old house to re-do the bits that are needed in new house!

Also, what is the get out plan if you can't sell. DH was happy to rent out old house. I was much less keen. But it was a way to deal with a no sale.

I think it depends on market conditions and the amount of spare cash you have. personally at the moment I wouldn’t contemplate this, as tempting as it might be. You could be left liable for two properties, ie be unable to sell the first. Buyers are financially stressed and house prices starting to fall. In a rising market I’d probably take a chance. At the moment, not so much. Unless you had a cast iron guarantee you could get permission to let your current house should the need arise, and had a real grip on the practicalities and legalities of being an accidental landlord.

Part exchange would be ideal, as you’re effectively transferring the risk to someone else. I’d pay a premium for that, I do think it’s right to pursue stability for yourselves, but I’d worry a bit that having two houses on the go and the pressure of having to sell within x months or pay CGT, as well as the inherent pressure of a move with small kids, would be hard.

I wouldn't personally dare do this as it seems very risky as you could end up being liable for 2 properties for many months.

If you have experienced a lot of problems in simultaneous selling & buying, I would prefer to sell first, rent for 6/12 months and then buy. There will always be an attractive new build home available and prices won't be rising any time soon, it appears.

I think you need to look at the figures. The second mortgage may well be a much higher interest rate. You’d also need to pay a deposit and fees for solicitors/ searches and removals. Yes you would get the extra stamp duty back but initially it will obviously be higher and you’ll have to stump up the extra cash initially. If you’ve gone back to the start of the selling process then I think you’d be wise to budget to pay both mortgages, two sets of council tax, insurance and utilities for at least 6 months.

If you can comfortably (i.e. with savings left over) do that and manage month-month, again with a decent buffer then I would consider it. If it would be a stretch don’t do it. There will be other houses.

I would also though calculate how much money it’s all going to cost and reduce your asking price a bit more to try to sell your own house quickly. Also bear in mind that it might be a bit more difficult to sell an empty house and you’ll need to beware of things like squatters etc, so keep a close eye on it.