No deposit for second house, any other way?

weemarie

I'm just wondering if anyone can offer any advice.
We own a very small house. We have no mortgage just a personal loan which will be paid off in 7 years. We need to buy a bigger house but don't have the 10% deposit for a mortgage.
I know that they don't let you use the property as the deposit anymore so is there any other way except for selling the house? Is it possible to get a mortgage on it now and use that for a second home or anything?

Thanks so much

Rackstar

It will be 20% deposit as you are not a first time buyer.

James Bond Junior

Rackstar wrote: »

It will be 20% deposit as you are not a first time buyer.

There is a loophole if you haven't taken out a mortgage but I'm open to correction on this.

Pinkycharm

Go into the bank and get your property valued independently asap. My first property was used as a deposit more or less until we could sell it.

You'd have your deposit and loan paid off with estimate hopefully.

sullivk

We are currently looking to upsize and plan on using the equity from my property sale as our deposit. We haven't been told this isn't allowed??

ThisRegard

But to have that equity as a deposit your current property will need to be sold to release it.

sullivk

ThisRegard wrote:

But to have that equity as a deposit your current property will need to be sold to release it.

Duh, I didn't read the OP properly!!

weemarie

Rackstar wrote: »

It will be 20% deposit as you are not a first time buyer.

Hi no I've checked this and it's 10% as we didn't get a mortgage

weemarie

sullivk wrote: »

We are currently looking to upsize and plan on using the equity from my property sale as our deposit. We haven't been told this isn't allowed??

But does this mean you're selling the house? We want to keep the small house and buy another

weemarie

James Bond Junior wrote: »

There is a loophole if you haven't taken out a mortgage but I'm open to correction on this.

That's right 10% as never had a mortgage

Michael D Not Higgins

weemarie wrote: »

I'm just wondering if anyone can offer any advice.
We own a very small house. We have no mortgage just a personal loan which will be paid off in 7 years. We need to buy a bigger house but don't have the 10% deposit for a mortgage.
I know that they don't let you use the property as the deposit anymore so is there any other way except for selling the house? Is it possible to get a mortgage on it now and use that for a second home or anything?

Thanks so much

You could mortgage the first house to release equity for a deposit on the second. However, you need 30% for the second house since it would be an investment property. Also, your mortgage on the second house would be reduced by the amount you already owe on the loan and mortgage.

For example, let's say you owe 50k on your personal loan and you want to buy a house worth 400k. Let's say you have a combined income of 100k. By the central bank rules, you would need 120k for a deposit, so you mortgage your home for that. Now you can borrow a max of 3.5 times your income so 350k. Take away the 120k+50k and you're left with 180k. You're now 100k short of your 400k target.

Try the sums with your own figures and speak to the bank about it.

Lux23

weemarie wrote: »

But does this mean you're selling the house? We want to keep the small house and buy another

Ah come on? Why do you need to keep the house?

weemarie

Ha, it's because if we sold it and paid off our current loan we still wouldn't have enough for a deposit, it's a tiny house and wouldn't be worth an awful lot. so it's a catch 22 for us and not just greed

weemarie

Thank you, that's very helpful.

Michael D Not Higgins

weemarie wrote: »

Ha, it's because if we sold it and paid off our current loan we still wouldn't have enough for a deposit, it's a tiny house and wouldn't be worth an awful lot. so it's a catch 22 for us and not just greed

From this and your opening post, I suspect you cannot afford a second house.