It isn’t illegal to have two residential mortgages at the same time. The issue is whether a lender will allow it, and what your plan is for the first property.
Most people who are moving home aim to sell and buy on the same day. But short overlaps can happen, and lenders deal with that all the time.
Why your lender cares
When you apply for the new mortgage, the lender will ask:
- are you selling the current flat, and when?
- could you afford both mortgages if the sale is delayed?
- will the first flat be your main residence during the overlap, or are you keeping it?
They’re mainly trying to avoid a situation where you end up committed to two sets of payments that you can’t sustain.
Two common outcomes
1) The lender requires simultaneous completion
If you can’t comfortably afford both mortgages, it’s common for the mortgage offer to include a condition that the purchase must complete at the same time as the sale of your current flat.
In other words, you don’t have to sell by law. The lender simply won’t let you complete the purchase unless the sale completes too.
2) The lender allows a temporary overlap
If you can afford both mortgages on your income, some lenders may allow you to complete on the new home before the old one sells, for a short period.
This is effectively treating the old property as “to be sold”, not “to be kept”, and the lender will want a credible plan and evidence the sale is progressing.
If you plan to keep the first flat
That’s a different conversation.
If you intend to keep it long-term, your new lender may treat it as a second home or an investment property, and they’ll underwrite you on that basis. Your existing lender may also need to approve a change of use (for example, consent to let) if you were to rent it out.
Don’t forget stamp duty
If you buy the new property before you sell the old one, you may have to pay the higher rate of stamp duty on “additional properties” at the point you complete, even if you plan to sell shortly afterwards. In some cases, you can reclaim the extra stamp duty later if you sell your main residence within the allowed timeframe.
A solicitor can confirm the exact position for your dates and circumstances.
What to do next
Work out whether you could afford both mortgages for a few months if the sale drifts. If the answer is no, assume you’ll need a lender that ties the purchase to simultaneous completion.
Either way, speak to a broker early. The right lender choice and the right wording on the application makes the process much smoother, especially where there’s any overlap between sale and purchase.
If you would like to find out more, then please call 023 8235 2300 or submit an enquiry.
