Hold off selling for 3 or 4 months

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eggerb

Registered User
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I am living in a 5 year old estate where houses are in huge demand and genuinely increasing by about 10,000 on each new house to sell. The last three houses have seen this over the last month. I have bought a new build and expect completion in about 8 weeks. I had considered putting the house up and selling before I close on the new house. However, now I am giving some thought to holding out for a few months and availing of the open end bridging the bank has approved me for. I should be able to leave my furniture in the house and make it look lived-in. Additionally, it will give us a lot of scope to fit carpets and floors to the new house. One thing I do need to clarify is the bridging rate. I think the bank mentioned giving me the bridging at the variable home loan rates, but I'll need to check that. What do you think about holding on for a few more months?
 
Presumably you are considering deferring the sale to benefit from any capital appreciation over the relevant period? I can't really see 3-4 months making that much difference in the greater scheme of things. On the other hand they usually say that the spring/summer months are busier in the residential property market so maybe holding off will allow you to benefit from higher interest/demand in the property. In addition not having to have all your ducks lined up in one go (sale of your PPR before you buy your new one - and depending on your seller having their own chain of sales/purchases lined up too etc.) may be beneficial and allow you to concentrate on one thing (purchase and occupation of new PPR) instead of two. However you need to consider of the costs (e.g. bridging finance and/or paying two mortgages/mortgage protection life assurance policies/home insurance policies/bills at the same time and so on) justify the benefits in terms of possible capital appreciation. If it was me and I had dedicded ultimately to sell rather than keep the former PPR then I would probably sell it sooner rather than later and not worry about timing the markets in an attempt to gain from additional capital appreciation.
 
bacchus said:
What are you trying to avoid by doing this?
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Could be wrong, but always felt that a house that looked lived in had a more welcoming feel to it. If I leave the place bare it may look a bit neglected and not have that welcoming/homely feel.
 
ClubMan said:
Presumably you are considering deferring the sale to benefit from any capital appreciation over the relevant period? I can't really see 3-4 months making that much difference in the greater scheme of things. On the other hand they usually say that the spring/summer months are busier in the residential property market so maybe holding off will allow you to benefit from higher interest/demand in the property. ........ However you need to consider if the costs justify the benefits in terms of possible capital appreciation.
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Many thanks clubman - this is exactly why I am considering deferring and exactly what I need to consider. I need to confirm with the bank the finer details of the bridging and keep an eye on what's happening to other houses on the estate.
 
Don't forget that if the house is unoccupied for more than c. a month then your normal owner occupier home/contents insurance policy may no longer cover it. If you rent it out short term then there are several possible tax implications.

Even if bridging finance is at mortgage rates are you sure that paying two mortgages at the same time is a good idea and the costs justify the possible benefits (in terms of possible additional capital appreciation)? Seems to me that if you can afford to it may make sense to benefit from the convenience of being able to move into your new PPR first and then, at your leisure, take your time about selling your old PPR and securing the best price. But I would not necessarily hold off just for a few months worth of capital appreciation.

Have you considered retaining the former PPR as an investment property? I'm not necessarily advising this but it might be worth at least looking into.
 
paul5 said:
Could be wrong, but always felt that a house that looked lived in had a more welcoming feel to it. If I leave the place bare it may look a bit neglected and not have that welcoming/homely feel.
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I am with you now, it's for selling it....
I thought you were concerned about potentiel tax implication in owning 2 places and selling one......which there is none if certain conditions are meet

clubman said:
If you rent it out short term then there are several possible tax implications.
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I thought that it was OK to move into your new property (new PPR) and rent former PPR for up to 12 months while still no having to pay CGT when selling former PPR ?
If that's correct, is there any other tax implications, beside paying tax on rent?
 
bacchus said:
I thought that it was OK to move into your new property (new PPR) and rent former PPR for up to 12 months while still no having to pay CGT when selling former PPR ?
If that's correct, is there any other tax implications, beside paying tax on rent?
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Possible SD clawback (if rental takes place within 5 years of purchase as an owner occupier), income tax on rental income etc.

One other thing to bear in mind is that you will have to stop claiming owner occupier mortgage interest tax relief on the first property when you move to the second one. You cannot claim this relief on more than one property.
 
paul5 said:
I need to confirm with the bank the finer details of the bridging.
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They'll give me the bridging at the variable home loan rate for 4 or 5 months and advance me up to 80% of the value of my existing house. I'd only need about half of this.
 
paul5 said:
and advance me up to 80% of the value of my existing house.
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I don't understand. You presumably have a mortgage outstanding on the existing PPR. You will also presumably have another mortgage on the new PPR. You will be paying both at the same time after you have moved into the second PPR but before you have sold the old PPR. How exactly does the bridging finance fit in?
 
ClubMan said:
I don't understand. You presumably have a mortgage outstanding on the existing PPR. You will also presumably have another mortgage on the new PPR. You will be paying both at the same time after you have moved into the second PPR but before you have sold the old PPR. How exactly does the bridging finance fit in?
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I have an existing mortgage on my current house. At the time of draw down of the new mortgage, the bank will advance me money to clear my existing mortgage (on the old house) and also advance me money to pay the shortfall between new mortgage and the new house price (10% in this case - I'll have a 90% mortgage). They will make these advances provided they don't exceed 80% the value of the current house - the LTV on the current house is about 45%. So essentially, I won't have two mortgages, but one - the new one. I have the option of paying the bridging interest as I go, or pay it all at the end on the sale of my old house.
 
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