Call us on 0344 346 3672
or arrange a callback

Mortgage on new house before sale of current house

Posted on 9 May 2012 by Andy


My wife and I have been overpaying on our mortgage and will be mortgage free in Sept-12 with equity of roughly £180k.

We have seen another property for £250k - we want to purchase this house prior to selling our current home (to avoid chains and be in a favourable position) but have no additional money for a deposit.

We will then sell the property separately as soon as the house purchase is complete. Is there any way i could do this? I know you can get 90LTV mortgages but i would need to raise approx £35k to cover deposit and house moving costs.

Andy

If your sale and purchase were to happen at the same time you would probably require a mortgage of around £75,000 - £90,000 after paying Stamp Duty, agent's fee, solicitor's and the such like and I think you want to avoid looking at high LTV mortgages on the new property.  These tend to have high rates and early repayment charges to tie you in for a couple of years before you can reduce the debt and look for a cheaper deal.  Instead you could use short term bridging secured across both properties to fund the purchase and aim to repay this with the sale of your house and a remortgage on the new property at far better rates and terms.

But, bridging finance can be expensive with a set up fee of around 2% and monthly interest charges of around the same figure and if you do not have a fixed completion date for your current home this could be a high risk strategy. 

I believe we can help you find the right solution for your situation and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question so that they can help you reach the right decision.

Peter

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


Legal

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.

John Charcol is a trading name of John Charcol Limited and its Appointed Representatives. John Charcol Limited is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 665649. Registered in England No. 9157892. Registered office address for John Charcol Limited is 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. The FCA does not regulate some investment mortgage contracts. Calls may be recorded for training and monitoring.