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Basic selling/buying advice

Discussion in 'UK Property' started by 83dons, Aug 29, 2014.

  1. 83dons

    83dons New Member

    I was wandering if anyone can suggest basically the best way forward for the following scenario.

    I have a house worth around 180k with no money owed on it.
    I have savings of 50k that can be used.
    I have identified a property for offers over 169k that I would like to buy.

    Can I put an offer in easily without first having sold my current property? If this is possible can I use my 50k savings to fund this offer for the period until the house is sold and I can transfer funds from that? If that is ok what charges would likely be incurred?

    The house will take at least a month or so to be sold if not longer but I would like to offer for houses in the meantime.

    Any general advice much appreciated.
     
  2. josephc247

    josephc247 New Member

    You are likely to get into a chain (of interlinked transactions) if you intend to make an offer before you out your current home in the market. While it doesn't (and should) really matter much. There are a few challenges you could face here.

    1. If you put in an offer using your available funds to assure your seller, then have a go. But you need to ask them make sure that they will take their property off the market so no other offers will be accepted. If the seller wants to sell it quick, they will prefer someone who has the funds ready for the purchase.

    2. If the seller agrees to your offer, and you've made arrangements for your purchase to push, then it's good. You'll have to pay them the funds you already have as a deposit. Usually at this point you will have exchanged sale/purchase contracts already through your lawyers/conveyancers. So there's no way any of you can back out of the transaction anymore, unless you want legal troubles ahead. But, the completion may take long and you might be unable to move in on your target date. You'll need to sell your house and have the rest of your payments forwarded to the seller soon after before you schedule your removals. This is likely to take longer especially if you cannot find an ideal buyer yet for your current property.

    Here are a few things that you might want to consider:

    1. Sell your current property before you buy (or make an offer), but that may not assure you that you'll still get the property (you mentioned) you want. But at least if something better comes along, you've got the money ready.

    2. Get a bridging loan and use it to show your seller you're serious about buying. Then as soon as your current property is sold, pay the loan off right away.

    3. Get a new mortgage and leverage on the equity of either the one you want to buy or the current property you have. Either way, as soon as your current home is sold and you've moved in to the new one, you can use the sale proceeds to pay off the mortgage.

    I hope this helps.
     
  3. Karen R

    Karen R New Member

    If you take a bridging loan you are in a much stronger position. You can roll the interest up so no term repayments will be required and then as soon as your property sells repay the loan in full. Some bridging loans have a minimum term requirement but for many that is just one month. By doing that you retain your savings and build a credit history. You can then decide whether to just repay the bridge using sale proceeds from selling you property or you may decide you would like to refinance the new property even with a very small mortgage as that way you have access to refinance for any future project should you need it, you can evidence a good repayment history and that makes future borrowing far easier. Whilst being a cash buyer is appealing, if you intend to buy and sell property or borrow for any purpose whether that be necessity, refurbishment, extension or just buying and selling property, most lenders require evidence of a good track record with borrowing. If you have no track record for them to review they assume worst case scenario meaning you pay higher rates and lenders are limited. Speak to a broker as they can give you all your options and will usually do so for free as many will review your situation and be able to provide terms of lending without any charge.
     
  4. FWL

    FWL Member

    A bridging loan makes perfect sense and they are used in simialr situations time and time again. The beauty is that you have equity in your home so I dont see any issues whatsoever with obtaining a briding loan. Obviously bridging loans attract a highish level of interest so you would need to sort out your property sale asap to save on expenses.
     
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