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  1. #1
    DF VIP Member Soulassassin's Avatar
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    Advice What's the best way to buy a new house if you own your current home?

    As per title really, we are looking to move home and have seen a property we like. Our house is not up for sale yet and requires some minor improvements before it goes on the market. We do however own our home outright and don't have any debt at all. The house we are looking at is about 20k less than our current home. What options are there, we do not want to let the property, just sell as soon as possible.
    Do I need a remortgage, a normal mortgage, a buy to let or a bridging loan?
    Will try to speak to a financial advisor but probably won't be able to till mid next week.

  2. #2
    DF VIP Member muttleymacclad's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    If you own your own house outright and don't have any debt, i'm assuming you are mortgage free.

    Are you looking to buy the house without selling yours but planning on selling yours after you buy the new house? In which case you'd need a mortgage for the whole amount you'd need to borrow.

    You could put your house on the market and let the buyer do the work but that may mean you get less than you would if you did the work yourself and sold it when finished.

    Need a bit more info on your thoughts really.

    You may have to borrow some money to pay stamp duty depending on the cost of the house you are wanting to buy.
    "When a naked man is chasing a woman through an alley with a butchers knife and a hard-on, I figure he isn't out collecting for the Red Cross." - 'Dirty' Harry

  3. #3
    DF VIP Member Soulassassin's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Yes mortgage free and yes to your first question.
    Ideally if we could get a 100% mortgage for the new house (which is about 90% of the value of our current house), move in to that one. See to the work required which is mainly cosmetic. Then sell the current house and pay the mortgage off and other fees with the excess that I'd expect to get with the sale. I could probably afford the mortgage but it's not something I'd want to keep for too long. I think our house would sell pretty quick due to location but I know that's a risk. But if I wait for this house to sell the one we want may get sold so I'm happy to take that risk.
    So would I basically need a 90% mortgage (90% of current house) and not require a deposit as it's secured on this property? Or are there other options?

  4. #4
    DF VIP Member robbo0070's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    i am in the same position and went to my bank who wasn't interested because it was short term lending.
    we are going to sell and move into rented intil we find what we want.

  5. #5
    DF VIP Member Lestronics's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    What about one of those "We buy any house" or similar adverts floating about lately? I'm guessing it'll be a shit offer though, but you never know !

  6. #6
    DF VIP Member hoponbaby's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    A few ideas:

    1. Bridging loans are expensive but an option as long as you can sell yours quickly.
    2. Do you have a deposit you can put down? If so and assuming your income and credit rating support it take out an offset mortgage on the new property so that when you sell the existing house you can effectively pay it off without penalty.
    3. Take out a remortgage on the existing property then pay it off when sold.

    Tbh as 1 & 3 could involve higher fees I'd probably go down option 2, that will then give you the flexibility of having finance available in the future while still being able to pay zero interest unless you need it.

  7. #7
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    Default Re: What's the best way to buy a new house if you own your current home?

    I would remortgage your current house to buy new house and then rent out your first house if the rent would pay the mortgage so it would still cost nothing and you have two houses.

    Cheapreefer on instagram

    Thanks to ss30

    DJAd (2nd April 2018)  


  8. #8
    DF VIP Member hoponbaby's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    There would be a 3% stamp duty charge for being a second home

  9. #9
    DF VIP Member Soulassassin's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Haven't got any significant deposit but I know my credit rating is very good. It's looking like a remortgage of this house seems the best way to go. Find a mortgage with no early repayment penalties and hopefully the difference may cover the fees, although initially may need to borrow from family to cover until house gets sold.

  10. #10
    DF VIP Member flipper321's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Anyone owning two homes because they have bought a new one, but not yet sold the old home, will have to pay the three per cent surcharge. But if the old home is sold within three years, the three per cent will be refunded.

  11. #11
    DF VIP Member Soulassassin's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Another update, bank couldn't give us a mortgage on our own home to buy another house. They would only fund a main residence. I should have just lied and said yes the current house will be our main residence but didn't think about that on the phone.
    We have managed to source a deposit so a mortgage now should be no problem and an offer has gone in for the house, just waiting for a response from the owners.

  12. #12
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    Default Re: What's the best way to buy a new house if you own your current home?

    Quote Originally Posted by Soulassassin View Post
    Another update, bank couldn't give us a mortgage on our own home to buy another house. They would only fund a main residence. I should have just lied and said yes the current house will be our main residence but didn't think about that on the phone.
    We have managed to source a deposit so a mortgage now should be no problem and an offer has gone in for the house, just waiting for a response from the owners.
    Wouldn’t you be better off seeing an independent mortgage advisor? Direct to bank your limited to that one institution really.

    I’m in a similar boat or going to be shortly with regards to wanting to turn my current mortgage into a buy to let and take equity to buy a new house.


    Sent from my iPhone using Tapatalk

  13. #13
    DF VIP Member Soulassassin's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    I think we will do that Ashley once an offer has been accepted. I was hoping there would be someone who had gone through this process with similar circumstances that might have some good info.
    After our viewing the estate agent phoned and recommended an advisor who phoned while I was out, will see what he has to say.

    Thanks to Soulassassin

    Ashley (30th March 2018)  


  14. #14
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    jaygo's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Here is what we did.

    Rented a property as needed a bigger house due to baby on the way. Will call this prop 2

    Agreed a 2 year let in rented property.

    Our own property which we will call prop 1.

    Prop 1 rented out and ensured that rental of property covered current mortgage as well as landlord insurance and small percentage to save for jobs that may occur.

    Prop 2 rented for full term and got friendly with landlords as they where wanting to retire.

    Approached mortgage provider to change mortgage to a buy to let and also saved as we got a good deal on % rate.

    End of rental at prop 2
    Approached Bank to get mortgage for property and made landlord an offer.
    Got it off them below market value

    Property 1 is fully sustainable with rental and have a long term tenant in there now.

    Property 2 mortgage is offset against mortgage at property 1 so we pay off additional when tenant pays his rent.
    Property 1 will be mortgage free in 10 years and if it keeps going the way it has with the rental property 2 will be mortgage free in 15 years max.

    When prop 1 is paid off may look at remortgage on both to get a 3rd & 4th property to rent or may just become mortgage free on both


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  15. #15
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    pratman's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    slightly off subject but............. my old man wants to add my name on to his house at the moment, in the even he passes away, not that he is ill or anything just old now, but he isnt sure whether to add my name to the property or transfer it to avoid any issues when he does pass away, i personally dont know what is the better option but maybe some of you guys on here might have a better idea of what the best option would be?

  16. #16
    DF VIP Member hoponbaby's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Depends on circumstances, is there potentially inheritance tax to pay? Is there a likelyhood of long term care etc.

  17. #17
    DF VIP Member MajorFU's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Hey pratman it always makes sense to own half your parents property in order to avoid inheritance tax although I think the high rates don't kick in until the estate is worth more than £320k or something like that. First port of call is speaking to an accountant to asses the best way to avoid paying high taxes based on "todays" laws.....I believe you would need to be on the land register for 7 years before the parent dies to avoid the inheritance tax

    Once you have a strategy you would need a solicitor to make the changes

    To the OP owning a second home ....even if for a short period of time is now a very expensive proposition, best to sell to buy unless you want to own 2 properties and make some money off one of them via renting. If you are a sole owner and your partner has never owned a property then you might be able to swing it....as always speaking to an accountant can help and when it comes to property can literally save thousands

  18. #18
    DF VIP Member hoponbaby's Avatar
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    Default Re: What's the best way to buy a new house if you own your current home?

    Quote Originally Posted by MajorFU View Post
    Hey pratman it always makes sense to own half your parents property in order to avoid inheritance tax although I think the high rates don't kick in until the estate is worth more than £320k or something like that. First port of call is speaking to an accountant to asses the best way to avoid paying high taxes based on "todays" laws.....I believe you would need to be on the land register for 7 years before the parent dies to avoid the inheritance tax
    It depends on whether IHT is going to be applicable - otherwise you can end up with the situation where the house would have passed down to you free from IHT but instead on sale you are liable for CGT due to the growth on you %.

    Also look out for anti-avoidance legislation such as gift with reservation, unless the parents are paying full market rent for the % they don't own then it could come back in to the IHT calculations and if they are paying full rent then this would be taxable on the recipient.

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