Mortgage dilemma!

[ScillyGirls]

Hello, I just wanted to pick the brains of anybody geeky or in-the-know about mortages and property please. I have already approached experts today but am awaiting further answers from them and time is very much of the essence so wanted to hear from another perspective.

So . . . I own a flat worth £175k (I paid in cash, no mortgage).

I have £100k in savings, so after I sell my flat I should have £275k to use as a deposit.

Today I saw my my dream flat on the market for £600k.

I called a mortgage advisor this morning and she was very helpful and told me I am a good candidate in theory (6-figure salary and good credit rating). She is going to get back to me on Monday with her findings and more information, but basically from what I can ascertain, I'd be providing a 40-50% deposit with a loan of £300-325k, I guess (without factoring in stamp duty and fees).

My dilemma is that I have set my heart on this one property, it is the only one I have seen in 3 years that is exactly what I want in the precise location I love. But I am not prepared for it because I was planning to wait another 6 months until I put my flat on the market.

I am willing to put my flat on the market right away in order to try and secure the new flat, but obviously I have no idea if it would sell quickly or take several months, and there is an open house viewing day for the one I want next week, and I would be surprised if there is not some demand for it. If I had already sold my place and had the extra cash I would be in a great position to make an offer!

So my question is... would mortgage lenders ever accept my £100k cash savings and then 'advance'(/loan me) the price of my existing flat (approx £175k) on top of the £300k mortage? I would then of course repay the 175k as soon as my place sells so would just be left with the £300k mortagage. I know it sounds unusual, but I thought there might be some sort of deal or mechanism that is offered, as it must be quite a common situation.

If this sounds totally unreasonable and naive, do forgive me - I am VERY ignorant about mortagages, but have always believed that there is no harm in asking! My advisor is unavailable until Monday so I can't run the question past her yet and I can't get it out of my mind.

Thanks in advance!

Thank you.

You can borrow up to the limit of your affordability, under normal terms, as this will be your only mortgage. It may well be £475k based on your earnings. Two problems though-
a) repaying a large lump sum in a short period. This could incur early repayment charges depending on the mortgage product, esp if a fixed rate deal.
b) higher stamp duty rates because you will own more than one residence. The excess can be reclaimed if you sell the old flat within a certain amount of time (can’t remember precisely) though you’ll need to bear it in mind for cash flow when financing the purchase.
I hope it works out. Sounds great!

In theory, lenders will lend you 4.5x times your base salary (although some lend less). So if your 6 figure salary is £100k, you may be short. If it’s £200k, you’re laughing.

As a PP has said, there are overpayment and tax implications, but nothing that can’t be ironed out with a broker and an accountant. If it helps, tracker mortgages (which lots of brokers are recommending at the moment) often don’t have early repayment charges so you could wait until the flat is sold and then pay off that portion. Alternatively, you could look into offset mortgages where you could hold the £175k from the flat sale in a savings account and drive down the interest on your mortgage using that.

Ask your broker about bridging loans

You wouldn't have a large enough deposit so I doubt it. Not to mention repayment complications. Agree with pp this is what bridging loans are for but they can be expensive so you don't want it for long.

You may wish to consider an "offset" mortgage. These are only offered by a small number of lenders and the interest rate is usually a little higher (by c0.5%) than on other kinds of mortgage, but you get enormous flexibility.
You could arrange a mortgage for 90% of the value (£540,000) using only £60,000 of your savings as deposit, assuming your salary is at least £120,000pa and you don't mind monthly repayments of circa £3,000pcm and you then put the remaining savings into the linked offset savings account which immediately reduces the interest you pay anyway. Then once you sell your old flat you can put the £275,000 straight into that offset account immediately reducing the effective balance of your debt with no penalty or ERC. After 2 years you can rearrange to a more normal mortgage if you wish.

Thanks so much everyone for all these interesting answers so far - educational and lots to consider/digest. You're fab!