Mortgage on property owned outright

[Sunnypad]

Hello!

I sort of know the answer to this but I guess it seems so weird, I'm asking on here.

I'm looking to get a mortgage on my flat, which I own outright.

The purpose is to buy a second property in cash.

Is it really the case that if my application is successful, they loan me the money i.e. transfer a lump sum to my bank account?

Would a bridging loan be better - I'm guessing not, due to interest rates?

Thank you.

[Dod101]

Hello!

I sort of know the answer to this but I guess it seems so weird, I'm asking on here.

I'm looking to get a mortgage on my flat, which I own outright.

The purpose is to buy a second property in cash.

Is it really the case that if my application is successful, they loan me the money i.e. transfer a lump sum to my bank account?

Would a bridging loan be better - I'm guessing not, due to interest rates?

Thank you.

Not sure why you introduce a bridging loan. These are essentially short term measures but you are proposing to use the cash long term to buy another property. Or do you mean that you would look to mortgage the second property and repay the bridging loan that way? A bridging loan in these circumstances is going to be short term so the interest rate is not that significant. I think what you need to do is decide where you want the final loan to lie, with your current property or the proposed new one? Some years back I did what you are proposing. My second property was a Buy to Let and I left the mortgage on my existing house. When I sold the BTL I just repaid the outstanding mortgage. That was the cheapest way.

Certainly, you will be at an advantage if you are a cash buyer so I can see your point.

Dod

[DrFfybes]

Hello!

I sort of know the answer to this but I guess it seems so weird, I'm asking on here.

I'm looking to get a mortgage on my flat, which I own outright.

The purpose is to buy a second property in cash.

Is it really the case that if my application is successful, they loan me the money i.e. transfer a lump sum to my bank account?

Correct.

They may ask what the loan is for - you might want to say "home improvements" as some lenders wil say you need a BTL loan.

We did pretty much this when we moved - refinanced a paid for house to purchase our next one, then sold the old one and paid them back. In our case we told them is was to fund a BTL as that gave us more options at the time.

Paul

Moderator Message:
Caution might be advisable if following this advice, as at first glance it appears to involve telling an untruth, which some might consider fraudulent. --MDW1954

[Dod101]

Hello!

I sort of know the answer to this but I guess it seems so weird, I'm asking on here.

I'm looking to get a mortgage on my flat, which I own outright.

The purpose is to buy a second property in cash.

Is it really the case that if my application is successful, they loan me the money i.e. transfer a lump sum to my bank account?

Correct.

They may ask what the loan is for - you might want to say "home improvements" as some lenders wil say you need a BTL loan.

We did pretty much this when we moved - refinanced a paid for house to purchase our next one, then sold the old one and paid them back. In our case we told them is was to fund a BTL as that gave us more options at the time.

Paul

I have always bought before selling, but unlike Paul I have always told the truth if I have needed a bridging loan. But that is not what appears to be needed here, and if asked, I would always tell the truth. No point in complicating life.

Dod

[Sunnypad]

Thanks all
I am probably using the wrong terminology.

I simply wish to mortgage my property in order to buy the next one in cash, without the complication of having to sell mine.

My hope is that, after buying a new one in cash, I can then sell the current one. If it doesn't sell, it would be let out, but I really don't want to do that.

I have no intention of lying to anyone, I just don't know the terms.

It might be better to ask for a let to buy mortgage? But it is my current property I want to raise money from. Do I just need a loan?

Thanks again.

[scotview]

I simply wish to mortgage my property in order to buy the next one in cash, without the complication of having to sell mine.

My hope is that, after buying a new one in cash, I can then sell the current one. If it doesn't sell, it would be let out, but I really don't want to do that.

Can you do this sort of thing if you are seventy or over? I believe mortgage/loan rules have been relaxed as far as age is concerned.

[DrFfybes]

We did pretty much this when we moved - refinanced a paid for house to purchase our next one, then sold the old one and paid them back. In our case we told them is was to fund a BTL as that gave us more options at the time.

Paul

I have always bought before selling, but unlike Paul I have always told the truth if I have needed a bridging loan. But that is not what appears to be needed here, and if asked, I would always tell the truth. No point in complicating life.

Dod

This was the advice of the agent we used - and to be fair had we bought sooner we were considering the option of renting it out until we decided to move. As it happened mum's illness and taking nearly 18 months to get the property meant there was no need to rent it out.

It also meant we could approach as cash buyers rather than mortgage approved (and probably expired several times).

Paul

[Dod101]

Thanks all
I am probably using the wrong terminology.

I simply wish to mortgage my property in order to buy the next one in cash, without the complication of having to sell mine.

My hope is that, after buying a new one in cash, I can then sell the current one. If it doesn't sell, it would be let out, but I really don't want to do that.

I have no intention of lying to anyone, I just don't know the terms.

It might be better to ask for a let to buy mortgage? But it is my current property I want to raise money from. Do I just need a loan?

Thanks again.

Ah well, that surely makes all the difference. I would be inclined to go for a bridging loan in these circumstances, although you might find one hard to get and in any case, are you trading down? Otherwise it would surely be difficult to cover the costs of buying a another one from any sort of loan on your current house.

You may have to mortgage your current house but again will you be able to raise sufficient to cover the cost of the new one? I would have a (free) chat with a mortgage broker and see how the land lies, but be sure you know what you are looking for!

Dod

[AsleepInYorkshire]

Hello!

I sort of know the answer to this but I guess it seems so weird, I'm asking on here.

I'm looking to get a mortgage on my flat, which I own outright.

The purpose is to buy a second property in cash.

Is it really the case that if my application is successful, they loan me the money i.e. transfer a lump sum to my bank account?

Would a bridging loan be better - I'm guessing not, due to interest rates?

Thank you.

Hi Sunnypad,

I've recently sorted a mortgage product for my parents-in-law. I won't bore you with the detail. Because of the product I was getting for them I had to use a broker. And I have to say it went smoothly with the broker taking an active role in progressing events timely.

The broker is London and Country I'm not sure if I am breaking any TLF in recommending them to you. I don't own shares in them and I've only used them once. Nor does my great grandson's niece three times removed work there .

You may wish to consider giving them a call and see where it takes you. Of course you don't have to use them if after talking to them you feel uncomfortable. I wouldn't suggest trying them if they did not meet my exacting standards and in fairness to them they surpassed my expectations and demands with ease.

I hope you have success in achieving your goals and of course, look after yourself and try and enjoy the process of moving home

Take care

AiY(D)

[Sunnypad]

Dod - I thought my second explanation was the same as my first!

Okay, I'll try again.

I own a flat outright.

I would like to buy another flat outright, in cash. I need an extra £50k- £80k ish to do this.

So I am trying to figure out how best to get that money. This will be based on a very very small income but could include my current flat as a let to buy.

Asleep - hello! Thank you. Yes, L&C are on my list already. I used a broker for my first mortgage and he was fabulous. Sadly,
I am not sure that kind of fabulousness exists now, it's all algorithms instead, though hopefully the fabulous brokers still have good jobs.

News since I posted...
If there's another stamp duty cut coming, the market might artificially inflate again. That was a nightmare and delayed me doing this in 2020. Personal matters have delayed it since. Argh. That's just a rant, btw.

[DrFfybes]

Dod - I thought my second explanation was the same as my first!

Okay, I'll try again.

I own a flat outright.

I would like to buy another flat outright, in cash. I need an extra £50k- £80k ish to do this.

So I am trying to figure out how best to get that money. This will be based on a very very small income but could include my current flat as a let to buy.

Aha - the amount is a small but very relevant detail - I think there was ambiguity about the LTV being quite high. An LTV below 50% opens up a lot more options, and I think a broker would be a good idea, especially with current interest rate movements.

I cannot see another stamp duty holiday, then again we didn't see the first one coming (and completed a couple of days before it was announced )

Paul

[Dod101]

Dod - I thought my second explanation was the same as my first!

Okay, I'll try again.

I own a flat outright.

I would like to buy another flat outright, in cash. I need an extra £50k- £80k ish to do this.

So I am trying to figure out how best to get that money. This will be based on a very very small income but could include my current flat as a let to buy.

Asleep - hello! Thank you. Yes, L&C are on my list already. I used a broker for my first mortgage and he was fabulous. Sadly,
I am not sure that kind of fabulousness exists now, it's all algorithms instead, though hopefully the fabulous brokers still have good jobs.

News since I posted...
If there's another stamp duty cut coming, the market might artificially inflate again. That was a nightmare and delayed me doing this in 2020. Personal matters have delayed it since. Argh. That's just a rant, btw.

All clear now! With these added details it seems to me that you will need to seek a mortgage on a new place to find the extra cash. To me that would be the cleanest way to go; otherwise you are into letting your existing place with all the hassle that that could be. So that might be your end aim (always useful to have a clear outcome in mind). Then the question is how to finance the move. Selling before buying another is again the cleanest way but you then risk having nowhere to stay if you sell before you can move into a new place. Otherwise you do the opposite and buy before selling, and that might entail a bridging loan but I am not sure how they property market works these days. I think as I said earlier, a chat with a mortgage broker would clear your mind a bit. Not sure I can help much further but sadly any move is stressful and no one I think can change that.

Others may have things to add, hopefully to help you. Good luck anyway.

Dod

[Mike4]

Thanks all
I am probably using the wrong terminology.

I simply wish to mortgage my property in order to buy the next one in cash, without the complication of having to sell mine.

My hope is that, after buying a new one in cash, I can then sell the current one. If it doesn't sell, it would be let out, but I really don't want to do that.

I have no intention of lying to anyone, I just don't know the terms.

It might be better to ask for a let to buy mortgage? But it is my current property I want to raise money from. Do I just need a loan?

Thanks again.

Hi Sunny,

This bit puzzles me. The bit I've emboldened.

It seems to me to be a bad move to mortgage your current flat then sell it once you've bought the next. You will incur some pretty big costs (valuation, application and broker fees) running well into four figures getting the mortgage and which will be wasted if you pay it off in a few months, and in addition there will probably be some hefty early settlement fees when you sell and have to pay the mortgage off anyway.

I'd have thought it makes more sense to simply buy the next flat with a mortgage to cover the shortfall in your cash available. In addition once you've moved into the new flat, you would need to ask the lender to convert the mortgage on your existing flat to a BTL mortgage before you can rent it out, and they might easily refuse.

[Sunnypad]

*Mike* I'm puzzled that you're puzzled. The market is brutal. Being a cash buyer is so much easier. The money on brokers fees and arrangement fees isn't that much. To save the botheration of going in a chain, and trying to live in the flat when it is on the market, it is well worth doing this way. I've already had one move fall through (I was going for a cheaper place so no mortgage needed that time).

The mortgage is seen as a "let to buy" mortgage which brokers are doing a fair bit of for potential second homeowners. I have been asked if I want that, or a loan, or a straightforward repayment, been told if it's empty for a year before letting it out, then a conversion is no problem.

The reason I posted the question was literally the mechanics of it - so after I do the deal, does the lender really plonk the money into my account?

I also thought there might be some helpful info here, as a lot of the people answering phones or emails on initial queries need the exact terminology or they go into "computer says no" mode.

I'll on ask on another well known board which I suspect we shouldn't name

That's all I was asking as I haven't done this before. Sorry, it was probably just a stupid question.

[Sunnypad]

Dod - I thought my second explanation was the same as my first!

Okay, I'll try again.

I own a flat outright.

I would like to buy another flat outright, in cash. I need an extra £50k- £80k ish to do this.

So I am trying to figure out how best to get that money. This will be based on a very very small income but could include my current flat as a let to buy.

Aha - the amount is a small but very relevant detail - I think there was ambiguity about the LTV being quite high. An LTV below 50% opens up a lot more options, and I think a broker would be a good idea, especially with current interest rate movements.

I cannot see another stamp duty holiday, then again we didn't see the first one coming (and completed a couple of days before it was announced )

Paul

If the market goes mad again, that will be really unhelpful.

I am a bit reluctant to put so much info on a board hence I didn't mention the LTV.

Dod - I have spoken to them but only theoretically, you have to have a decision ready before they give much info.

I actually think home improvement loan might be a goer, though how one spends £50k improving a small flat, I'm not sure! But it might be the easiest route.

[kempiejon]

though how one spends £50k improving a small flat, I'm not sure!

Use high-end designer Lulu Lytle and includ gold-coloured wallpaper and fittings.

[Sunnypad]

though how one spends £50k improving a small flat, I'm not sure!

Use high-end designer Lulu Lytle and includ gold-coloured wallpaper and fittings.

A)
B) I now have an answer if they ask me - thanks!

[AsleepInYorkshire]

Hi Sunnypad,

Just a reminder that when you get your new property sorted you are required under TLF rules to invite us all over for a tipple

And as you're now going to own more than one property, we shall consider you very wealthy and will not be bringing our own drinks My badness. And a bit like the start of The Hobbit we will require enough food to feed an army

Take care

AiY(D)
*Gets coat

[Sunnypad]

Hi Sunnypad,

Just a reminder that when you get your new property sorted you are required under TLF rules to invite us all over for a tipple

And as you're now going to own more than one property, we shall consider you very wealthy and will not be bringing our own drinks My badness. And a bit like the start of The Hobbit we will require enough food to feed an army

Take care

AiY(D)
*Gets coat

This was absolutely standard when I actually had friends! My flat warming here was hilarious, it was open house from about 2pm on a Sunday. Inexplicably, everyone showed up at the same time, about 4pm. It's small, so there were about 30 people and I was basically stuck next to the kettle and booze table while they all talked to each other!

I had tons of food but still had to send my bestie out to get more. The booze lasted because my parents had supplied a shedload. Yes, I'm spoiled

Bestie was so drunk by the end, my sister didn't want him to go home as she thought it was unsafe and that I should insist in him staying...but he got on the night bus and went to a bar in Soho to keep drinking. The friends who accompanied him to the bus stop said he was highly entertaining.

Happy days. It's quite strange to think this time I won't even have help in moving. (Bestie is still around but far too busy, he might offer help, I dunno).
But this is way OT!

[Gerry557]

I'm a bit confused over the endgame BTL and or just being a cash buyer on a next flat.

Getting a mortgage promise type thing for the new flat sounds the most logical as that mortgage will stay with the property you end up in unless there are reasons why this can't be done.

Mortgaging the first flat to buy the second is fought with problems. Cancel costs, transfer issues etc.

I can understand not being in a chain. I'd discuss with mortgage brokers to see who can come up with the best option.

It also depends on timescales ie you want somewhere to live whilst gutting the new one for modernisation etc.