Buying new house before you've sold old?
Discussion
I've been prepping my old place for sale, was hoping to get a valuation in the next couple of weeks, but a house has come up for sale thats perfect - and thats impressive given my immense pickyness in terms of location/size/costs. Off to view on Friday hopefully.
So, anyone bought a new house before they've started the sale process on their old? Seems to be 3 options:
1. Hope old house sells quickly once committed to new
2. Get a bridging loan
3. 'Let to Buy' with old house, free up some equity from it, and use that to buy new house. Once settled, attempt to sell old.
Seems that 1. is down to luck, 2. is generally frowned upon, and 3. is great as long as you can afford to pay 2 mortgages at once (for a while).
Any experience of this?
So, anyone bought a new house before they've started the sale process on their old? Seems to be 3 options:
1. Hope old house sells quickly once committed to new
2. Get a bridging loan
3. 'Let to Buy' with old house, free up some equity from it, and use that to buy new house. Once settled, attempt to sell old.
Seems that 1. is down to luck, 2. is generally frowned upon, and 3. is great as long as you can afford to pay 2 mortgages at once (for a while).
Any experience of this?
Never done it myself but watching tv development shows I know I wouldn't of touched a bridging loan during the boom years, so it definitely would not even be thought of now times are worse, the risk of it is just too high for me.
1 is the best option IMHO 2 and 3 are far too risky financially.
1 is the best option IMHO 2 and 3 are far too risky financially.
We got a bridging loan in 2005 to buy our current house, but I'm not sure how easy it would be to arrange such a thing today.
The housing market is poor and if there is another recession then market values could drop again so you'd have to be very careful in presenting your case. I'd suspect that if you're asking for the full market value of the new house you could struggle, but the best thing to do is talk to whoever you have your current mortgage with.
The other thing you could do is talk to the sellers of your prospective house and offer them a non-refundable deposit to take the house off the market. You can do that through your solicitors and it does show how serious you are. The sellers are in a no-loss situation, if you complete they know what their sale price is and if you pull out they have £5k or whatever for their troubles. Given how slow the market is going to be, they might well take it.
The housing market is poor and if there is another recession then market values could drop again so you'd have to be very careful in presenting your case. I'd suspect that if you're asking for the full market value of the new house you could struggle, but the best thing to do is talk to whoever you have your current mortgage with.
The other thing you could do is talk to the sellers of your prospective house and offer them a non-refundable deposit to take the house off the market. You can do that through your solicitors and it does show how serious you are. The sellers are in a no-loss situation, if you complete they know what their sale price is and if you pull out they have £5k or whatever for their troubles. Given how slow the market is going to be, they might well take it.
Would really depend on what current house is? FTB'er house or higher up the food chain? If FTB'er this si what I did & sold no problems, funnily enough to a BTL investor so I rented it back while the new house was being built! Pure luck. Current house is higher up the chain so I would not commit legally to a new house until that one had legally exchanged too.
Hi,
if you think you're going to fall in love with the place then might I suggest yu speed things up a little? Let's assume when you view it on Friday you're smitten and don't want to lose it. You'll need to negotiate with the vendor on price but at least as significantly you'll need to display your commitment to the property. Presently your position is not particularly strong as you've not either got yourself under offer (or even on the market) nor have you investigated other financial options to secure the property. If the roles were reversed how would you react to an offer on your own house from a similar buyer?
I have little exeperience with bridging loans so I would suggest you get cracking on investigating this method fairly sharpish. Personally I'd be inclined to leave well alone as rates are not cheap and you would be making a fairly expensive bet on being able to sell your home swiftly to pay off the loan. You know more about your home than I do but broadly speaking the market is tough, price sensitive and Christmas is coming so all things being equal I wouldn't expect a simultaneously fast sale with a high price achieved. Start a thread here or in finance titled "Bridging loans" and see what those with direct experience say.
Let to buy. The market is better than it was and yields are recovering but this is not a particularly easy route and as thousands of landlords are finding out small BTL portfolios are not pain free or cost free. Again, you might want to investigate this more seriously quite soon.
Marketing your own and doing it the normal way. The standard route is preferred by most for lots of sensible reasons. Your main worry here would be getting yourself into a proceedable position soon enough. You may convince the seller of your dream home to give you a period of grace but that's unlikely. Honestly (and I can't believe I'm suggesting this) if I was to attempt this I would do it behind the agents back directly with the seller. THey're much more likely to become emotionally attached to you and thus accept such terms. The agent would be unlikely to recommend such a thing to their client but once agreed directly the seller might be mortified to go back on an agreement since "we promised..." You may however find that any offer you submit will be ignored entirely (due to your position) or be given any response between these two. In any event if you're relying on selling your own home to back up your offer you need to get going sharpish. How about TODAY you arrange to have your property valued by three reputable local agencies and for an appointment to be made with an IFA with a view to getting going as soon as you can? I say "today" as you may find leaving it until you've viewed the house on Friday (pm?) may leave you unable to get these three reputable local agents to visit your home the following day (Saturday) and not until the following Saturday (unless you are prepared to take time off in the week - as an aside people looking to invest many hundreds of thousands of pounds in a 20 year investment are rarely happy to meet a good agent / IFA on a work day. If they can't see that person within 24 hours (or whatever) they often decide to see a poor agent / /IFA instead...). That's another week lost. In any event at the very minimum spend the next few days considering which (if any) agents you think best to employ and get your finances in order so that you can get going quickly. And get the house ready. Properly ready.
Then it's just a race - with a little bit of luck thrown in as you mention. Will you sell yours before someone in a better position comes forward and offers an acceptable package to the sellers of the house you want. We're still selling houses every day. Maybe it is the same in your part of the World. Maybe the market is terribly sluggish. We still have sticky properties too, of course. The biggest single reason for any of those properties beng sticky is resolved quite easily but not painlessly.
So, if you're really genuinely keen, either get on with it or don't be surprised if it doesn't happen.
Shall I expect a thread along the lines of "How do you choose the right Estate Agent?" anytime soon? (Don't put that in The Lounge, by the way.)
Bit of a long rambling response - apologies. Good luck with it all.
if you think you're going to fall in love with the place then might I suggest yu speed things up a little? Let's assume when you view it on Friday you're smitten and don't want to lose it. You'll need to negotiate with the vendor on price but at least as significantly you'll need to display your commitment to the property. Presently your position is not particularly strong as you've not either got yourself under offer (or even on the market) nor have you investigated other financial options to secure the property. If the roles were reversed how would you react to an offer on your own house from a similar buyer?
I have little exeperience with bridging loans so I would suggest you get cracking on investigating this method fairly sharpish. Personally I'd be inclined to leave well alone as rates are not cheap and you would be making a fairly expensive bet on being able to sell your home swiftly to pay off the loan. You know more about your home than I do but broadly speaking the market is tough, price sensitive and Christmas is coming so all things being equal I wouldn't expect a simultaneously fast sale with a high price achieved. Start a thread here or in finance titled "Bridging loans" and see what those with direct experience say.
Let to buy. The market is better than it was and yields are recovering but this is not a particularly easy route and as thousands of landlords are finding out small BTL portfolios are not pain free or cost free. Again, you might want to investigate this more seriously quite soon.
Marketing your own and doing it the normal way. The standard route is preferred by most for lots of sensible reasons. Your main worry here would be getting yourself into a proceedable position soon enough. You may convince the seller of your dream home to give you a period of grace but that's unlikely. Honestly (and I can't believe I'm suggesting this) if I was to attempt this I would do it behind the agents back directly with the seller. THey're much more likely to become emotionally attached to you and thus accept such terms. The agent would be unlikely to recommend such a thing to their client but once agreed directly the seller might be mortified to go back on an agreement since "we promised..." You may however find that any offer you submit will be ignored entirely (due to your position) or be given any response between these two. In any event if you're relying on selling your own home to back up your offer you need to get going sharpish. How about TODAY you arrange to have your property valued by three reputable local agencies and for an appointment to be made with an IFA with a view to getting going as soon as you can? I say "today" as you may find leaving it until you've viewed the house on Friday (pm?) may leave you unable to get these three reputable local agents to visit your home the following day (Saturday) and not until the following Saturday (unless you are prepared to take time off in the week - as an aside people looking to invest many hundreds of thousands of pounds in a 20 year investment are rarely happy to meet a good agent / IFA on a work day. If they can't see that person within 24 hours (or whatever) they often decide to see a poor agent / /IFA instead...). That's another week lost. In any event at the very minimum spend the next few days considering which (if any) agents you think best to employ and get your finances in order so that you can get going quickly. And get the house ready. Properly ready.
Then it's just a race - with a little bit of luck thrown in as you mention. Will you sell yours before someone in a better position comes forward and offers an acceptable package to the sellers of the house you want. We're still selling houses every day. Maybe it is the same in your part of the World. Maybe the market is terribly sluggish. We still have sticky properties too, of course. The biggest single reason for any of those properties beng sticky is resolved quite easily but not painlessly.
So, if you're really genuinely keen, either get on with it or don't be surprised if it doesn't happen.
Shall I expect a thread along the lines of "How do you choose the right Estate Agent?" anytime soon? (Don't put that in The Lounge, by the way.)
Bit of a long rambling response - apologies. Good luck with it all.
Renting your place out would be the best option, though trying to get sort out the mortgage before Christmas may be a tall order!
Your best bet is just to sell yours first before you start to look seriously at other houses or you are just going to end up disappointed (speaking from experience here)
Your best bet is just to sell yours first before you start to look seriously at other houses or you are just going to end up disappointed (speaking from experience here)
Option 1 is fine if it sells quickly. The problem is if you get interest then someone in the chain pulls out for whatever reason or you get some numbnuts trying to do a last minute "we'll pull out unless you reduce your price by £25k". Or something happens to the house while you're trying to sell it eg burst pipe in your absence which goes on for weeks.
Option 3 sounds like the best option as you know where you are from the outset. (Although I can't quite vision what a "let to buy" system is.)
Option 3 sounds like the best option as you know where you are from the outset. (Although I can't quite vision what a "let to buy" system is.)
Thanks all for the info - scenario8 that was a lengthy response
All good info though, and I agree I need to move quickly if its ever going to happen.I've pretty much dismissed the bridging loan idea. I'm lucky in that my current propery (an apartment) is in a very popular area, they tend to sell (and rent) very quickly. Not seen one for sale in quite some time.
Might have a word with my financial advisor, see how he can make the figures work. Despite having a large amount of equity in my current property, I don't think its enough to make it work in terms of letting out the existing AND buying the new, as the new one is stretching my budget and the LTB will need a high LTV.
Bridging loans seem to have dried up with mainstream lenders. I found personally that LTSB and Nationwide don't do them.
I got round it last year by remortgaging my "old" house on a zero redemption cost product, then using that as the deposit on a "new" house. Fortunately there was sufficient equity to cover both.
When the old house was sold the remortgage was then paid off.
The mortgage product wasn't the cheapest at 4% p.a. ish, but was better than the subprime bridging loan rates of 1% a month.
I got round it last year by remortgaging my "old" house on a zero redemption cost product, then using that as the deposit on a "new" house. Fortunately there was sufficient equity to cover both.
When the old house was sold the remortgage was then paid off.
The mortgage product wasn't the cheapest at 4% p.a. ish, but was better than the subprime bridging loan rates of 1% a month.
Talk to the estate agent selling the house that you want to buy (viewing permitting). They may have people on their books looking for a property like yours in terms of area, size, cost etc. They will be very keen to market yours as it's potentially a 'double sale' for them.
This is what happened when we moved a few years back, after being on the market with a crap agent for a good few months. Once we'd switched agents to the one selling the house we wanted we sold in two days.
This is what happened when we moved a few years back, after being on the market with a crap agent for a good few months. Once we'd switched agents to the one selling the house we wanted we sold in two days.
Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff