Non Simultaneous Sale and Completion

Posted on 25 February 2012 by Richard


I have a house worth approx £210,000 and a mortgage with £108,000 to pay. I have found a house I'd like to buy for £278,000 but my property isn't on the market. Can I have two mortgages simultaneously? Would it be possible to remortgage to release equity and then use this as deposit (I have money for deposit but not enough to get below 75% I'd need to get interest only loans to minimise the cost during the overlap period. I intend to sell my first house. I currently earn £85k/yr and NatWest and Nationwide calculators are showing me lending of well over what I would need.

Richard

It is possible to have two mortgages simultaneously, but lenders will only consider it if your income will support the combined debts.  There are two ways they will calculate affordability:

1.  They will add the two debts together and apply a multiple to your annual income.

2.  They will take the monthly payment for your existing mortgage and deduct this as a monthly commitment before performing their affordability calculation.

If you haven't done so already, you can check if this route is feasible by increasing your monthly commitments on the Nationwide and NatWest websites.

There is another way of financing the purchase which does not depend on your income and this is known as bridging finance or short term lending.  The usual practise is to remortgage your existing property giving you enough funds to put down as a deposit on the new purchase and to cover the interest charged until repayment.  The loan term can be anything from a matter of days up to 12 months depending on your circumstances and there are no early repayment penalties.  However, the interest rates charged are not cheap and you should not enter into a bridging agreement without a realistic strategy for repaying the loan.  In your case this will be from the sale of your property and you will need to be realistic about your chances of achieving a sale before the loan has to be repaid.

I believe we can help you 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, they will then be able to help you find the right mortgage for your situation.

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.

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