We have a joint income of £45k and we own our property outright, its worth £230,000. We want to purchase another property worth £275,000 and have £105,000 for cash deposit, but we dont have a buyer for our house yet and want to borrow the difference to buy the new property until we've sold. What are our chances?
As you own your property outright it should be possible to raise up to 75% of it's value as a short term loan. This would give you £172,500 towards your new purchase. You can expect to pay around 1.50% per month as well as a 2% arrangement fee. These costs would be added to the loan and repaid on the sale of your house. Whilst this may seem expensive it could mean the difference between successfully purchasing the house you want and losing it whilst you wait for yours to sell.
However, this may not give you sufficient funds to cover stamp duty and other associated costs of purchase and it might be that you would be better arranging a mortgage on the new property. If you choose a mortgage with no early redemption penalties then you would be able to redeem it once your own house is sold. It is likely that this would be a cheaper alternative.
I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and tell the consultant the date and title of your question. They will be able to look at your situation and advise you accordingly.
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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