Moving house with low mortgage

jos_kel

Hi,
Before asking Bank just wanted to get views on here.
We have 15k balance on mortgage. If we move again it will be our 3rd and possibly final move. For this reason we want to get it absolutely right.
We would like to avoid being caught in a chain between selling and buying.
Would a bank work with us on this to ease the transition and allow us to take our time between selling and buying, particularly as we have a small mortgage.
I know there are bridging loans, but isn't the rate high which would still impact us?

MarkAnthony

I think bridging loans have gone - open to correction. However at that amount you could get an unsecured loan I would have thought. Bear in mind an outstanding loan will count against what you can borrow.

Basically I think you have the right idea - speak to the bank and see what the options are.

You mention not wanting to be in a chain; where are you going to live while you wait for the the house you want to move into to be ready or are you planning on renting?

Greyian

MarkAnthony wrote: »

You mention not wanting to be in a chain; where are you going to live while you wait for the the house you want to move into to be ready or are you planning on renting?

I got the impression (based on the mention of bridging loans) that the OP was looking more along the lines of buying the new property before selling the current one.

I'm assuming the OP wants to be able to buy their new property without:
A) The bank making them sell their current property before/alongside buying the new property
or
The bank reducing the mortgage offer available for the new property by €15k (the outstanding mortgage on the current property), as that would limit the property that the OP could buy (or else, force them to sell their current property prior to buying the new one, in order to get the necessary mortgage size).


There's no real hard and fast rule with these things jos, so you'll probably have to go in and speak with the bank about it. If you have the luxury of being able to wait a few months/about a year before buying, is there any chance you could actually try and clear the mortgage on the current property entirely, thereby allowing you to get a completely new mortgage (with no restrictions based on outstanding loans/mortgages) for the new property? That way, you would then be completely in control of when (or if) you sell the old property.

jos_kel

Greyian wrote: »

I got the impression (based on the mention of bridging loans) that the OP was looking more along the lines of buying the new property before selling the current one.

I'm assuming the OP wants to be able to buy their new property without:
A) The bank making them sell their current property before/alongside buying the new property
or
The bank reducing the mortgage offer available for the new property by €15k (the outstanding mortgage on the current property), as that would limit the property that the OP could buy (or else, force them to sell their current property prior to buying the new one, in order to get the necessary mortgage size).


There's no real hard and fast rule with these things jos, so you'll probably have to go in and speak with the bank about it. If you have the luxury of being able to wait a few months/about a year before buying, is there any chance you could actually try and clear the mortgage on the current property entirely, thereby allowing you to get a completely new mortgage (with no restrictions based on outstanding loans/mortgages) for the new property? That way, you would then be completely in control of when (or if) you sell the old property.

Yes that's what I think we'll do, clear off the mortgage and then buy before selling.
The only risk, I guess, is if the market went down in the meantime. In other words, we'd end up buying high and selling low.
I guess there's always pros and cons.

jos_kel

Greyian wrote: »

I got the impression (based on the mention of bridging loans) that the OP was looking more along the lines of buying the new property before selling the current one.

I'm assuming the OP wants to be able to buy their new property without:
A) The bank making them sell their current property before/alongside buying the new property
or
The bank reducing the mortgage offer available for the new property by €15k (the outstanding mortgage on the current property), as that would limit the property that the OP could buy (or else, force them to sell their current property prior to buying the new one, in order to get the necessary mortgage size).


There's no real hard and fast rule with these things jos, so you'll probably have to go in and speak with the bank about it. If you have the luxury of being able to wait a few months/about a year before buying, is there any chance you could actually try and clear the mortgage on the current property entirely, thereby allowing you to get a completely new mortgage (with no restrictions based on outstanding loans/mortgages) for the new property? That way, you would then be completely in control of when (or if) you sell the old property.

Rang the bank about this and it appears that even if we have 0 mortgage on current home. They will only calculate new mortgage based on salary and monthly outgoings.
They said that this would be regarded as an investment property.
However all we want is a deal tailored so that we don't get in a buy sell chain ie if we saw a house that we liked in the morning the funds would be there with the understanding that we pay back a vast chunk of the new mortgage (if necessary) when we sell our existing house.
I've made an appointment anyway.
Clearly it's not an investment property were looking for.
An estate agent said a solicitors letter could clarify things.
Is this not a common scenario for banks?

Michael D Not Higgins

jos_kel wrote: »

Clearly it's not an investment property were looking for.
An estate agent said a solicitors letter could clarify things.
Is this not a common scenario for banks?

I think the issue would be that the bank can't tell the difference between your situation and someone planning on renting their second property. The mortgage lending rules prevent them lending on a second property unless it's as an investment property, ie with 70% LTV. The problem is they would be gambling on the future value of your current property.

Also, if that would work, what's to stop someone using it as a way to circumvent the rules?

jos_kel

Michael D Not Higgins wrote: »

I think the issue would be that the bank can't tell the difference between your situation and someone planning on renting their second property. The mortgage lending rules prevent them lending on a second property unless it's as an investment property, ie with 70% LTV. The problem is they would be gambling on the future value of your current property.

Also, if that would work, what's to stop someone using it as a way to circumvent the rules?

So basically the only way to avoid a buy sell chain is to sell first. Bummer.

Desmonddoyle

Michael D Not Higgins wrote: »

The problem is they would be gambling on the future value of your current property.

Well not really, unless you think there is any risk at all that the value of the property will fall into negative equity i.e less than 15k.

I would have thought it would be less risk for the bank as you have a sizeable asset than you can liquidate if anything ever goes pear with your ability to pay the new mortgage.

There must be an easy solution to this - it must be a regular enough occurrence where people with so little debt in their home are undecided whether to sell or not, or simply to hold off selling to avoid the whole chain nonsense.
Keep us updated OP - be interested to hear if there is any common sense to modern banking

jos_kel

Desmonddoyle wrote: »

Well not really, unless you think there is any risk at all that the value of the property will fall into negative equity i.e less than 15k.

I would have thought it would be less risk for the bank as you have a sizeable asset than you can liquidate if anything ever goes pear with your ability to pay the new mortgage.

There must be an easy solution to this - it must be a regular enough occurrence where people with so little debt in their home are undecided whether to sell or not, or simply to hold off selling to avoid the whole chain nonsense.
Keep us updated OP - be interested to hear if there is any common sense to modern banking

Yeah, have to admit I was a bit surprised.
Thought that we would have some kudos whereby the banks could work with us on this.
Clearly our house would have to drop from 300k to 100k before there would be any hint of a problem if at all.
Common sense isn't as common as you would imagine.

jos_kel

jos_kel wrote: »

Yeah, have to admit I was a bit surprised.
Thought that we would have some kudos whereby the banks could work with us on this.
Clearly our house would have to drop from 300k to 100k before there would be any hint of a problem if at all.
Common sense isn't as common as you would imagine.

Now bank is saying they won't give a mortgage of less than 40k (needed if we sell first).
Why on earth is that? The cynic in me is thinking the bank is not interested in our business and is not either high risk enough or profitable to their balance sheet over a long period of time.