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Old 19.04.2017, 23:45
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Mortgage questions for buying second house

I would like to sell my existing house and buy a new one. Seems to me I can't make any offer until my existing one is sold, otherwise if my offer is accepted, I won't be able to find mortgage for the new house before I can pay back the old mortgage by selling it.

How do people solve this issue?

Besides, I'm using 10-yr fixed rate for my existing mortgage and this year is my 5th year. If the current rate is higher than my rate, the buyer will be happy to take over my mortgage right?

However, if the current rate is lower, can I make up the buyer by paying for the interest difference? If so, how do I verify the offer buyer provides? e.g. call each bank and ask them if that offer is valid? How do people solve this issue in practice?
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Old 19.04.2017, 23:51
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Re: Mortgage questions for buying second house

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I would like to sell my existing house and buy a new one. Seems to me I can't make any offer until my existing one is sold, otherwise if my offer is accepted, I won't be able to find mortgage for the new house before I can pay back the old mortgage by selling it.

How do people solve this issue? See below

Besides, I'm using 10-yr fixed rate for my existing mortgage and this year is my 5th year. If the current rate is higher than my rate, the buyer will be happy to take over my mortgage right? Probably yes, depends if new owner needs a mortgage

However, if the current rate is lower, can I make up the buyer by paying for the interest difference? I don´t think so, no, unless you are selling below value of the house
Sell first and try to put in a clause that allows you to stay longer, i.e. sale will happen in the future
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Old 19.04.2017, 23:57
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Re: Mortgage questions for buying second house

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Sell first and try to put in a clause that allows you to stay longer, i.e. sale will happen in the future
I was told I can bring my existing mortgage to the new house. However, without selling existing one how can I buy a new one? Sounds like a dilemma to me.
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Old 20.04.2017, 00:10
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Re: Mortgage questions for buying second house

You need to speak to your lender first. Generally, banks etc love lending money - even at today's low rates.

You would be well advised to sell before you buy, but a bridging loan would be possible if you have 2 properties for a short while. You can take your mortgage with you subject to your lender's agreement. Or your buyer may be able to take over your mortgage is they can't get a better deal...
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Old 20.04.2017, 00:17
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Re: Mortgage questions for buying second house

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I was told I can bring my existing mortgage to the new house. However, without selling existing one how can I buy a new one? Sounds like a dilemma to me.
You need to speak to your bank to see if you can borrow more money to buy a second house while the first one is not sold yet.

If the second house you have your eye on is a resale, in other words not a new house which is to be built, then you have fewer options.

One never knows how long it will take to sell your house and it is better to be cautious and not overly optimistic.
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Old 20.04.2017, 10:26
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Re: Mortgage questions for buying second house

We were in this position. We had found a house that we liked, and the bank would not finance it without us selling our existing place. (Initially, the plan was to keep it and rent it out). So, we made an offer on the new house on the condition that we could sell our existing property.

The sellers agreed to hold the property and give us 3 months to sell our flat, and we used the same agency to sell our property. We thought that doing this would give them a lot of incentive to find a buyer for our existing home. it all worked out, and we ended transferring our existing mortgage, with the same terms and conditions, to the new property.
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Old 20.04.2017, 10:28
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Re: Mortgage questions for buying second house

I took out a bridge loan when buying our current house. Had a clause in it to repay a part after 1 year by which time the other place was sold. Some extra interest to pay but it gave us enough time to sell the old place off.

Depending on where you are, how your place looks like, what environment it is in, it may take some time to sell it!
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Old 20.04.2017, 10:36
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Re: Mortgage questions for buying second house

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However, if the current rate is lower, can I make up the buyer by paying for the interest difference? If so, how do I verify the offer buyer provides? e.g. call each bank and ask them if that offer is valid? How do people solve this issue in practice?
You can talk to the bank. Usually, they will buy the mortgage back at a cost which is calculated on interest difference + a fee. It is normally calculated as the difference between the rate you are paying and the rate on the remaining term. As an example, lets assume you are paying 2%pa and the 5 year fix is 1% pa you can sell the mortgage back for 1%pa. This would be multiplied by the number of remaining years. so, it can be quite a significant amount.

good luck with everything.
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Old 20.04.2017, 10:37
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Re: Mortgage questions for buying second house

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I took out a bridge loan when buying our current house. Had a clause in it to repay a part after 1 year by which time the other place was sold. Some extra interest to pay but it gave us enough time to sell the old place off.

Depending on where you are, how your place looks like, what environment it is in, it may take some time to sell it!
Out of interest, did you discuss what would happen if you were not able to sell your existing property?
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Old 20.04.2017, 10:39
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Re: Mortgage questions for buying second house

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Out of interest, did you discuss what would happen if you were not able to sell your existing property?
Another clause to be able to extend that bridge loan on a yearly basis. So not ideal from an interest perspective but it gave us sufficient "breathing space".
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Old 11.08.2017, 17:01
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Re: Mortgage questions for buying second house

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Another clause to be able to extend that bridge loan on a yearly basis. So not ideal from an interest perspective but it gave us sufficient "breathing space".
May I know it was with which bank? and how much the bridge loan can be? I am thinking of doing the same thing as you do.

Many thanks!
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