Buying now, selling later?

Soldato
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Are here any creative solutions to this situation?

Our flat has been on the market for quite some time, we should have reduced it sooner but we've just had a baby and there is very little stock on the market where we'd like to replicate to, so selling has been a low priority for us. We had a viewing on it today, so depending on feedback we can reduce the asking price on Monday.

We've just been to see a place today that we really like the look of. It's priced to sell, has loads of potential, and while it needs a proper upgrade it's clean and liveable now.

We have a 5 yr fix, with 2 years left on it. We can port our mortgage and increase the borrowing on our current deal, and our finances/earnings support an increase in borrowing. So selling our flat and then moving is obviously the standard protocol.

The key point here is that, if push comes to shove, we're able to put together the necessary deposit for the new place without needing to sell our current flat. Such a process would all be relatively tight on our finances, so to speak, but it's doable. We'd still look to sell our flat, but it would give us a much more flexibility to buy now and sell later. We'd have to fork out an extra 3% in stamp duty, but that is refundable if we all the flat within 3 years.

Is the best option - if our mortgage company allows - to flip our current flat into a buy-to-let mortgage and then take out a new mortgage for the purchase of the new house? Or are there any other ways of completing the move?

I'm going to speak to our mortgage advisor first thing on Monday morning, but keen to have a few different options in mind when I speak to him. He's a very good broker and has an excellent relationship with our lender. We could get our mortgage approved very quickly.

The house we saw is being sold by probate and has loads of interest on it - a house across the road went within 2-3 days, and we could hear the viewers before us today discussing how to make an offer.
 
Soldato
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In this situation you might be right to stretch yourselves financially if you’ve found a diamond.

The options that I can see are:

1. Dump the asking price on your flat and sell it as quickly as possible. Minimise the amount of time you’ve got a second mortgage on the go and the associated costs of owning 2 homes.

2. Let the flat out. Even for a short term, while you decide on whether the market will give you your current asking price or more.

You don’t necessarily need a buy to let mortgage on your current place unless you’re planning to actually rent it out.
 
Soldato
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In this situation you might be right to stretch yourselves financially if you’ve found a diamond.

The options that I can see are:

1. Dump the asking price on your flat and sell it as quickly as possible. Minimise the amount of time you’ve got a second mortgage on the go and the associated costs of owning 2 homes.

2. Let the flat out. Even for a short term, while you decide on whether the market will give you your current asking price or more.

You don’t necessarily need a buy to let mortgage on your current place unless you’re planning to actually rent it out.

Thanks. Number 1 is a likely option for us. We did a big renovation a few years back and dropping it you a very realistic asking price would mean realising no profit on the place after the cost of the renovation is factored in. But to be honest, I don't really mind that if it means getting this new place. Leant a lot from that renovation... chalk it up as a life lesson.

Would the second option be a possible one? As it would mean getting a mortgage on the new place whilst retaining the existing mortgage on our flat, and I'm not sure our finances (salary, etc.) would stretch far enough to get approved for the mortgage on the second place.

Annoyingly I seem to recall the mortgage advisor saying that we couldn't port our current mortgage if we don't sell the flat (I.e. not being able to flip the flat to BTL and port it across to the new place). Need to confirm that on Monday though.
 
Soldato
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Depending on the lender you can ask for consent to let, we did it on one of our houses.

I had no problem during my existing deal. When I remortgaged I had to go to a BTL specific rate.

The easiest thing for letting your existing flat, as far as finances go, would probably be to keep your existing deal on the current property and set up a new mortgage on your new place. Of course it depends on what LTV you can come up with as to whether it’s a good deal or not.

As a former accidental landlord I can’t say we made any huge profit. When the time was right to sell we didn’t immediately buy another BTL property put it that way. The hassle for a single property is rarely worth the effort IMO, but it depends on the exact figures.
 
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The only other solution I can offer is a bridging loan. You need to go into these with eyes wide open as the rates are typically high (c 10% or so), but its the standard way of moving before you sell if you expect the time period to be short.

The big risk I see you are entering (no matter the funding solution) is that you don't sell the flat quickly and as such should there be a market correction (and lets face it with Brexit it has to be higher risk than normal) you could end up with two properties going down in value. No issue if you can be in it for the long haul, but an issue if your trying to sort your finances and just do the traditional one house route.

I would 1) try to get an offer on the house accepted. They may do a few things if demand is very high, go to sealed bids, and/or say completion by xx date, cash only buyers etc
When/if you get an offer accepted then you would know any limitations and change your strategy as applicable.
 
Soldato
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Thanks everyone.

I'm not too concerned about a house price correction, as the place we're hoping to buy is very much a long-term option. If our flat then doesn't sell in those three years and we end up forgoing the second house stamp duty refund, then we can just hold onto the flat as an ongoing investment property.

I've got a sneaking suspicion - which I'm hope to not have confirmed tomorrow - that our current mortgage won't let us port without selling and we'll have to pay a penalty fee to break the mortgage - we've got two years left on it and the penalty could be £15k!

The house in question has so much potential value - could go from 1,300 sq ft to 2,500 very easily, with a huge basement and loft to convert. It's in a bank of 6 houses we really like that come onto the market infrequently. This place is on for the first time in 40 years!
 
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Thanks everyone.

I'm not too concerned about a house price correction, as the place we're hoping to buy is very much a long-term option. If our flat then doesn't sell in those three years and we end up forgoing the second house stamp duty refund, then we can just hold onto the flat as an ongoing investment property.

I've got a sneaking suspicion - which I'm hope to not have confirmed tomorrow - that our current mortgage won't let us port without selling and we'll have to pay a penalty fee to break the mortgage - we've got two years left on it and the penalty could be £15k!

The house in question has so much potential value - could go from 1,300 sq ft to 2,500 very easily, with a huge basement and loft to convert. It's in a bank of 6 houses we really like that come onto the market infrequently. This place is on for the first time in 40 years!

From what you have said surely the best solution is to price the flat to sell. Everything has a price and as soon as you start offering to sell below that market price you have a good chance.
Do you knpw the estate agent well, they often have buy to let people they also know well, if the flat would be a good opportunity for one of them and your willing to make it attractive they may be able to go direct to a few and do some direct marketing/conversation.
 
Soldato
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Worry about it when you've sold your flat, until then you don't even know if you can afford the new house.

As mentioned, we can put the deposit together for the house without needing to sell the flat. It's more a question of how flexible our mortgage is than affordability. I was interested to see if there were any more creative routes, as it looks like I might need to pay the cancellation fee otherwise.
 
Soldato
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From what you have said surely the best solution is to price the flat to sell. Everything has a price and as soon as you start offering to sell below that market price you have a good chance.
Do you knpw the estate agent well, they often have buy to let people they also know well, if the flat would be a good opportunity for one of them and your willing to make it attractive they may be able to go direct to a few and do some direct marketing/conversation.

The estate agents haven't exactly been great help. We've got 3 weeks left of the 12 week initial agreement. I'm thinking of telling them to get us an offer of at least £X in that three weeks or well go with someone else. That £X would be about 15% off the current asking price.
 
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If there is a lot of interest in the house you really want your offer to be chain free. Probate sales are often split across a few people and they tend to be more time sensitive than price sensitive.
 
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If there is a lot of interest in the house you really want your offer to be chain free. Probate sales are often split across a few people and they tend to be more time sensitive than price sensitive.
This and a bit more, the family will all be waiting for the house sale to get their hands on the cash, the quicker that can happen for them the better.

I think you might be out of luck and need to get ready to pony up the 15k at least, the mortgage company might let you move the same mortgage to a new house and continue with the additional borrowing but i doubt they are going to let you change the mortgage into BTL mortgage and then get a new one on the new property.
 
Soldato
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You'll probably need to consider that you'll need at least 25% equity in the flat to take out a buy to let mortgage on it, particularly as first time landlords.

There's currently about 40% equity in the flat, which should help. But I expect Slade2 is correct. I'm sure I'll find out today.

I was tempting on making an offer over the weekend, but wanted to make sure of our footing beforehand. I've got a sneaky suspicion that we've been beaten to the punch.
 
Soldato
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Made a damned offer! It's not legally binding, just do it. Make it on the assumption that you're chain free, in fact, tell them you're a cash buyer. It doesn't matter until you get down to the business of getting the process rolling, and by that time you'll know one way or the other and either have everything in order, or not and you can retract your offer.

Your existing mortgage I'm sure will be fine. The official thing I had to get from my lender (Santander) was consent to let. That was until the existing deal was up and then I was on to BTL deals.

I highly doubt that your flat will be a nice little earner, especially if you've not had much luck selling so far. What it will do is keep ticking over and paying the mortgage off until you can sell it. It gives you time to move on the new property and put in a chain free offer.

The property market (buying process) in England is a bloody joke, but at least play the game to your advantage.
 
Caporegime
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Keep the flat, rent it out. You skip all the grief associated with selling and possibly on to a nice earner eventually.

worst advice anyone could give him.

if he is having to ask the question on here then it's obvious he ain't flush with cash.

so what happens if it takes him 2-3 months to get it rented? then the tenants decides to withold rent?

he now has 2 mortgages to pay for and legal fees. he could quite easily now be forced to sell his new home and then fight to get back into his old one.

Sell your old house before buying. Simple as that really. Unless you are minted. I had someone buy a new house move in and then the market crashed and they struggled to sell the old one. The new one was easier to sell as a new build, etc. So they ended up selling the new house at a loss to move back into the old one.

You don't want 2 mortgages unless you can afford both of them with ease. Simple as that really. Basically means you can afford both without having to rent it out.
 
Caporegime
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There's currently about 40% equity in the flat, which should help. But I expect Slade2 is correct. I'm sure I'll find out today.

I was tempting on making an offer over the weekend, but wanted to make sure of our footing beforehand. I've got a sneaky suspicion that we've been beaten to the punch.

see above - sell the flat before buying a home
 
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