Approval and 20% deposit

maxsmum · 22-08-2018 8:58pm #1

Hey, we have mortgage approval and 20% deposit to move house (from an inheritance), but have our current home to sell. We ideally want to use our mortgage approval to buy the next house and then put our current one on the market, leaving us a comfortable couple of months to move in and do any works on new house first without being left homeless.
We could afford the 2 mortgages for a few months.
Will the bank let us do this? (I know I need to ask them but wondering if anyone else has done it).
I'm way too terrified to put our house on the market and then scramble around trying to buy another one for fear of being homeless.

tobsey · 22-08-2018 9:22pm

You wouldn’t sell your own until you’re ready to buy the new one anyway.

You could try get a new mortgage for the new house but the bank will look at your current outgoings, including your current mortgage to decide if you can afford it. The bank have their own affordability criteria and it’s stress tested based on 2% above their standard interest rate. You’d have to be able to show you can afford that rate of a mortgage plus all other expenses.

maxsmum · 22-08-2018 9:30pm

We are saving the amount of the new mortgage repayment every month, on top of paying our own mortgage - so we can afford it.
What is there to stop us selling our house and then someone else buying our intended purchase and leaving us homeless? I couldn't take that chance.

tobsey · 22-08-2018 9:34pm

Your solicitor and agent do this sort of thing all the time so they’ll advise you. Thousands of people do it every year.

Lumen · 23-08-2018 4:54am

Yes, I have done this.

Baby01032012 · 23-08-2018 8:24am

maxsmum wrote: »

We are saving the amount of the new mortgage repayment every month, on top of paying our own mortgage - so we can afford it.
What is there to stop us selling our house and then someone else buying our intended purchase and leaving us homeless? I couldn't take that chance.

There’s more than one house in the country how could you be homeless. B&b airbnb short term rental etc.

Otherwise you need to time your sale to coincide with the purchase. Doubt bank will lend, no bridging finance anymore. You will at least need to show your own house is for sale. Otherwise your looking at BTL mortgage which is higher rate and 30% deposit.

_brendand_ · 23-08-2018 8:30am

maxsmum wrote: »

Hey, we have mortgage approval and 20% deposit to move house (from an inheritance), but have our current home to sell. We ideally want to use our mortgage approval to buy the next house and then put our current one on the market, leaving us a comfortable couple of months to move in and do any works on new house first without being left homeless.
We could afford the 2 mortgages for a few months.
Will the bank let us do this? (I know I need to ask them but wondering if anyone else has done it).
I'm way too terrified to put our house on the market and then scramble around trying to buy another one for fear of being homeless.

This would be an unorthodox way of going about this. You would usually go one of two ways. The most usual way is to get an offer on your existing home and use the proceeds of that, minus what you still owe, plus whatever funds you can arrange from the bank in the form of a mortgage and your savings, to make an offer on the second home. Example:

Value of home: 400,000 Euro
Existing mortgage: 300,000 Euro
Inheritance: 100,000 Euro
New mortgage: 300,000 Euro
Total funds available: 400-300+100+300 = 500,000 Euro

You could offer up to 500,000 Euro on the next property.

The trick there is that you would be in what's called a 'chain'. Solicitors and banks would be well used to dealing with this kind of situation so it won't put them off, however buyers can be put off as it can cause complications in the sale. Essentially everyone needs to go into binding contracts simultaneously and then working out completion can be tricky. Once you get to a certain price point though people become more accepting of 'the chain' as there will be fewer buyers out there with the funds available to buy outright.

The other option, which we took because of coming from a different country to return to Ireland is to just sell the existing house and find other accomodation in the interim. You won't be considered first time buyers, but you will not be in a chain either, which sellers like.

Your plan fits neither option and I think the bank will raise an eyebrow at it. You will effectively be purchasing a second property and the bank will lend on that basis. Much higher deposit required (40-50%?) and much stricter income guidelines - I believe many banks would be looking for total income of 100,000 plus to sanction such a mortgage.

It doesn't hurt to go around lenders and see if they'd be okay with this, but if you want my opinion I would say it's highly doubtful.

maxsmum · 23-08-2018 9:04am

Well the issue is the seller won't wait for us to sell our house and this is a particular house we want... we aren't generally househunting.
I have a toddler and am pregnant so moving to short term accommodation is a no no. Total income is 140000. I'm going to ring mortgage line today and see what they think...

Lumen · 24-08-2018 11:04am

maxsmum wrote: »

Well the issue is the seller won't wait for us to sell our house and this is a particular house we want... we aren't generally househunting.
I have a toddler and am pregnant so moving to short term accommodation is a no no. Total income is 140000. I'm going to ring mortgage line today and see what they think...

I did mine through Ulsterbank private banking, they were great. My existing mortgage was also with Ulsterbank. Whilst private banking sounds like something Roman Abramovich would use, in reality you just pay 50 a month to less rubbish customer service. I cancelled it after a while as I wasn't getting any value of of it.

It was much, much less stressful than being in a chain.

GalwayDonegal · 26-12-2018 8:09pm

Mod Note

Member warned for bringing a dispute from another form into A&P purely so that a post can be reported.

Do not act like that again please.

The_Conductor · 26-12-2018 8:48pm

Lumen wrote: »

I did mine through Ulsterbank private banking, they were great. My existing mortgage was also with Ulsterbank. Whilst private banking sounds like something Roman Abramovich would use, in reality you just pay 50 a month to less rubbish customer service. I cancelled it after a while as I wasn't getting any value of of it.

It was much, much less stressful than being in a chain.

Some banks, such as Premier Banking from Bank of Ireland (based down in Kilkenny)- don't even charge for private banking facilities- its all to do with the cashflow through your accounts. Private banking facilities are definitely the way to go for the OP- and are so much easier to deal with.

caviardreams · 26-12-2018 9:59pm

Just to keep in mind, what if you do manage to purchase the new home, and then have difficulty selling your original property e.g. not being able to find a buyer at the price you need, or if you ran into unforeseen legal/title issues etc. It might actually be less stressful to sell at the same time or before you buy.

Approval and 20% deposit

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