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I would appreciate your input in the below scenario:
We are in the process of trying to buy a new resi for £995K with stamp at £42K. Total required £1.037M
The sale of our current resi has been slow (given the market) but worse case numbers as below:
Free cash post sale £230K
New current Mortgage agreed on new resi for £550K
Basic salary £75K (plus last year bonus £15K )& £23K salary for my wife. Both perm
I am 35 years old and my wife is 33.
No credit cards or loans
Savings of £360K held.
Therefore total £910K funding agreed now before taking my resi into the mix.
I appreciate our obvious scenario is to sell our current resi and buy the new one.
However The property we wish to purchase has now Received a no chain offer which the vendor is considering.
We want to be chain free and want this house!
Therefore what are our options (if any) to buy the new house without selling our current resi? Given the current potential shortfall is circa £127K (less additional stamp)
A full bridge loan on the new house would be eye watering so not worth considering.
Rental on our current house would be £1800 pcm therefore we would not be able to convert to let to buy and pull more money out in the short term.
Once our current resi is sold we are OK, but I don’t think the vendor on the new place will hang around now given the new offer.
We would appreciate your thoughts on ways in which we could fund the purchase of the new house without selling our current house in the short term.
Some tangible direction would be useful
Thank you in advance
Hi Navin,If you were to take out a BTL mortgage on your current residence, the rental of £1800.00 will support an approx. borrowing of £270K, based on the standard PRA calculation.If you opt for a 5 year fixed, there may be a lender who will lend to a higher LTV and close the gap a bit - I have not worked out the exact figures!!Therefore, this seems do-able.To me, it makes far more sense to keep your current property than sell it anyway. It's a significant asset that could help secure your financial future in the long term, while earning a net income month on month to contribute to the mortgage on your new home.Speak to the team at PT Brokers on 0333 363 6507 to see how you can release the most equity from your current residence.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thank you for your prompt response Vanessa.
Sorry I should clarify my current resi has £370K outstanding
I am basically £165K short as it stands without selling my resi
-could we get more on the new property (current offer £550K)
If you speak to the team at PT Brokers, they will try and find a way. Using the other calculation for a five year fix, your rental income could raise a BTL mortgage of circa £345K . That closes the gap quite a bit and you could ask your current lender if you can split off the £25K difference as an unsecured loan on redemption.Good luck and do let us know how you get on.
Red Brick Boy,
not sure if you have this covered now, but did you see our post late last week "Resi mortgages on own home for BTL landlords". Please feel free to contact us if your problem is still outstanding.
BTL's, residential mortgages, bridging, life cover and estate planning
For Commercial Finance, complex BTL and HMO funding, development finance, international and expat mortgages, and portfolio BTL mortgage services Assured Funding website.
Telephone: 07751042485 01206 654444
You are in a difficult position. With £1,800/m rent you might be able to borrow up to around £496k on a buy to let with a lender that has a more generous rental calculation (for 5yr fixed rates) but if the value of your current property is £600k then that would be 83% loan to value and most lenders will not go above 75% - limiting your choice of lender considerably and those who will go above 80% charge for the privilege.
That said, if you do then rent it out at least someone else is paying the mortgage for you (on an interest only basis I would suggest). The bridging route is comparatively expensive but it is only meant to be for the short term so a 1% fee with something just above 0.5% per month is expensive but they only go on for a year. This makes the cost say 3% over six months – not ludicrous but not cheap either – what counts against you is that is not particularly easy in November/December/January.
The additional stamp duty would have to be paid on the purchase but if you sell your current main residence within 3yrs you should be able to get that returned at least. If you are renting it using a buy to let mortgage on a 5yr fixed rate then you need to factor in the redemption penalties that would be applicable.
You could look to borrow some extra on your current property. Hindsight is a wonderful thing and in the current property climate people looking to offer on properties before they are under offer themselves are in an unenviable position unfortunately.
I hope this helps,
Call the PT Broker Hotline on 0333 363 6507 or email us at firstname.lastname@example.org