Buying a house, but loan approval subject to selling existing house

Acorn22

Registered User
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Hi All
I have €106k Mortgage. I am not in negative equity.
I want to purchase a new home but the bank have said that it won't approve my mortgage until I sell my current home.
I preferably would like to move from this house directly into a new one as I have a few kids and I have explored the rental market with a view to selling (and collecting my cash) and renting but there are little or no houses for rent in the area and surrounding areas of community and school. Also the rent is very expensive.
The bank have mortgage approved me for 230K subject to the sale of my house.
I have 80k in savings and was thinking of borrowing 26k to clear the mortgage. I will then own the house but will be selling it as soon as I move out as I don't want to own a rental property in this area. Will this make a difference to the mortgage approval amount? The bank will hardly increases the amount they approved me for? I know they will lower the mortgage amount due to the 26k loan. Or should I just pay a portion of it off or will it make any difference? I will also need a deposit for new home so I'm bearing that in mind. Any suggestions? Kind regards K
 
You should give all the figures and information to get a meaningful answer

Value of current home
Mortgage: €106k.
Lender:

Savings: €80k

Price of house you want to buy:

How you intend to fund the new house without selling your existing house.
 
Hi Brendan,

Thanks for your advice. Here are the details:

Current value of home: €190,000 -€195,000
Mortgage : €106K
Current Lender: Ulster Bank
Savings: 80K
Price of house to purchase €300k
Was thinking of getting loan for €26k (if paying off mortgage in full)
Deposit potentially 60k as it's 20% of say 300k.

I intend to fund the new house with the mortgage approval but I am wondering if the mortgage amount offered to me will increase as a result of paying off a mortgage. Or does it make no difference at all? I will be selling the property as soon as contract is signed on new house.

Kind regards

K
 
Does anyone have any other perspective on this one? Is there no other way around it apart from trying to secure a rental? I want to sell my house as soon as I have secured a new home. I just want to avoid the renting with children if possible and I'm looking for a way around it if possible.
 
What are retired people who are mortgage free doing if they want to downsize and use the equity from their property to pay for the transaction? Is any of the banks supporting these venture. Do they still release equity from a house that is mortgage free if necessary?
 
There is no point in paying off your current mortgage. In fact, it's the last thing you want to do.

House price: €300k
Less savings: €80k
Mortgage required: €220k

Existing mortgage: €106k
Total mortgage after buying new house: €330k

You would need a salary close to €100k to justify this.

What is your current salary?

What mortgage rate are you on? If you are on a very cheap tracker, Ulster Bank will allow you to retain it but with a rate increase of about 1%.

But that would apply only if you sell your existing house.

Brendan
 
What are retired people who are mortgage free doing if they want to downsize and use the equity from their property to pay for the transaction? Is any of the banks supporting these venture. Do they still release equity from a house that is mortgage free if necessary?
You've 3 main options, unless your income is enough to support adequate mortgage, or you've a wealthy friend that'll lend you the money:

1. Sell, move to rental & buy later.
2. Try close purchase & sale on same day. Unless you're living in a very fast moving area this is very difficult to achieve, and stressful (especially when you have children). A lot of things outside your control can go wrong.
3. Sell to an investor who'll agree to immediately rent house to you until you buy.
 
Thanks RedOnion. I'll think about those options! I was hoping the banks would be more helpful if you own a property outright. Having to sell and then rent out a property isn't helping the housing crises. It would be great if the government and solicitors could work together to make the close purchase and sale on same day more accessible and doable.
 
We’ve sold and purchased and have managed to just have a week between the sale and purchase. Luckily to have relatives we can stay with for that week. It is do-able but we are in a fast moving area (for our sale anyhow)
 
We’ve sold and purchased and have managed to just have a week between the sale and purchase. Luckily to have relatives we can stay with for that week. It is do-able but we are in a fast moving area (for our sale anyhow)
Hi House2020, our area is fast selling too. Our neighbour put his house up for sale mid July 2019 and he was out of the house with contracts exchanged and job done on September 20th 2019. He went with my Solicitor who is very efficient. The difficulty we are having is when we put a bid in for a house the Auctioneers will ask us 'what is the condition of our sale'. I will say that it is subject to the sale of our own house and immediately we are told no that the 'vendor' is requesting a cash buyer or a first time buyer only. It is only houses that are not shifting in the market (and usually to me it's very obvious as to why they are not shifting) are the ones that auctioneer's will allow us bid on.
 
Buying and selling and trying to marry the 2 is very tricky indeed. Any chance there’s a new build you’d be interested in?
realistically if you’re set on moving get cracking on clearing your house out, paint/refreshen it and get it on the market ASAP. Once you’ve done that you’re in a much better position. You might find a buyer that’s currently renting that will be very flexible with closing. In an ideal world you’d move from one to the other but realistically you might need to put your stuff in storage for a few days while sale closes and purchase goes through. Trying to do in the one day is practically impossible. Just don’t go with a buyer in a chain and ideally the property buying not in a chain either
 
Hi luckystar,
We were looking at a new build but felt that they were a lot more expensive in comparison to a second hand house! We'd prefer a second hand buy if possible. Definitely the new build was an easier solution as we'd have a date to move in an could have worked around that, however from a financial point of view it just didn't make sense to me.
 
Are there a lot of estate agents operating in your area? What can sometimes help is is the same agent is involved in selling your house and the one you want to buy. There's only so much they can do, but they might present your offer in a more favourable light to sellers.
But you need to get your house ready to put in the market. Massive declutter, freshen it up, and fix little things. No harm having a few agents give you estimates of selling prices, and their fee. They might even already have potential buyers. You need to be ready to sell if the right house cones along for you to buy.
 
Hi Redonion, my house is ready to go. I've been working on it for the past year. I'm selling the property myself as it cuts out fees. My neighbour did this and it worked out well for him. With no agent involved it allowed him a lot more flexibility plus it saved him the fee.
 
I'm selling the property myself as it cuts out fees
It might be a bit of a false economy when trying to match a buy & sell transaction. A good agent (they're not all good!) will be worth the fee to you.

IMO, Unless you're sale agreed with an open closing date, I can't imagine an estate agent taking an offer seriously on any purchase when you're selling yourself.
 
True Redonion, that did cross my mind insofar as the 4k fee may potentially save me a year's rental contract (if I was lucky enough to secure one) on top of the stress of renting and moving twice. My neighbour had left his job (thus had time to sell himself) and was moving in with family. So the circumstances are different and that did cross my mind.
 
When you approached the lender, did you explore the option of long-term rental of your existing home once you purchase the next?

I had initially obtained mortgage approval based on the assumption that I would sell my current property, but as highlighted above, agents told me they would not even accept a bid on some of the properties I was looking at if I hadn't already closed on my own. Even the same agency were reluctant. If you're buying in a slow area, they might be more accommodating.

It might be worthwhile to reapply for mortgage approval on the basis of keeping and renting the existing property if you can build the savings to a sufficient level to cover deposit, fees and costs until you can rent the existing one.
 
Hi Leo, thanks for your post. Yes I did and they wouldn't allow us keep the house and rent it out. A neighbour down the road kept her house (with a view to selling it) and purchased a new one and I mentioned this to the bank manager. If don't recall word for word what he said but it went along the lines that they had the money to keep onto their old house temporarily. It has now since sold but was vacant for a good 8-12 months before selling. They had purchased that house around 2000 so I reckon they paid a lot less than I did for mine and had been there up to late 2018/early 2019. All of that makes a difference.

Yes it would be great to have an asset as I suppose a house with mortgage (your home) isn't really an asset. I might explore the idea again with the bank.
 
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