I can't sell but need to move

Posted on 8 May 2008

I have a house in my sole name on the market for £350,000 with £130,000 left on the mortgage. In the current climate it's not shifting. We don't want to lose the house we want to buy which we have agreed a fee of £440,000 for. I am married and my wife has no mortgage but earns about £35,000 per annum. Am thinking of getting a buy to let in her name for our current property using it to raise a 10% deposit on the new house and putting that solely in my name.....is this a sensible way to proceed in order not to lose the house we want to buy ? Or is a bridging loan a better option?

 

There is no need for you to do anything so complicated.  With a buy to let, it doesn’t matter that you already have a residential mortgage (or are about to move to a new one), in fact, you’ll have trouble finding a lender that will grant you a buy to let mortgage if you don’t already have a mortgage on your own home!  You just need to get a buy to let, in joint names if you wish (income is largely irrelevant, your loan size is calculated on the monthly rental income) in order to take some equity away to use as deposit for the new place.   Use a buy to let deal with no Early Repayment Charges so that you can redeem the loan when the house sells.  Don’t forget, you are expected to actually let a buy to let, so plan to be a landlord for 6 months to a year at least, of a property probably losing value.

 

Bridging would need to be of the ‘open ended’ variety in your case, as you don’t know what date you’d pay it back, so the rate would be high. It’s also time consuming to arrange and you would still need to be able to afford both properties between you. The cost is my main reason for making this a last-ditch option.

 

Of course, just reducing the selling price should shift the property, after all, the market has fallen to around 1% less than this time last year, and is expected to continue to fall by around 4-8% this year, so the longer you leave it, the more likely it is that you’ll need to reduce heavily.

 

Best of luck.

 

Category: Let-to-buy

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