"Can I remortgage my home to buy another one to trade down?"

[Brendan Burgess]

A friend of mine has a house in Dublin worth around €600k, mortgage free. He wants to retire to the country.

He wants sell his own home to buy a house for around €300k. But he wants to buy the house first before selling his own.

He is 60, so he couldn't get a conventional mortgage.

Would any lender give him €300k secured on his existing home?

I have advised that he should simply sell first and buy for cash, but he does not want to do this.

Brendan

 

[Gerard123]

Sounds like your friend isn't sure perhaps if he/she wants to sell, or are they? I would have thought that they would get a short term loan from a bank to buy, CONDITIONAL on them selling the existing house within a certain time period. Would need to persuade the bank to do this but couldn't see one of the main banks refusing, assuming there is a relationship with the bank, clean history, a legal commitment to sell is entered into, etc. Would need to have a very clear proposition, eg have identified house to buy, will sell within x months. Also obvious question bank will ask is the one you had - why not sell first? Also will come at a cost though, rate, legal fees.

 

[mf1]

The friend should go and ask his bank.

They will probably look at him blankly and say why don't you sell your own house first? Pay for new house in cash? The reason we won't lend to a 60 year old is because................

It is also a lot of aggravation for what might be (a) a very small return if all goes well or (b) a very small return if all goes belly up

There may just be an element here of making a situation harder than it needs to be to put off inevitable hard decisions. Or thinking that usual commercial rules don't apply to people who are special?

We're all special, at least to our Mammies, if not our banks!

mf

 

[44brendan]

Brendan you should look at this from a bank's perspective. Effectively what your friend is requesting is an open ended bridging TL on the sale of his property which he has not yet put on the market. Lets assume that the bank agrees to his proposal. He purchases a property down the country and moves into it. Then one of the parties decides that he/she doesn't like living in the country and they move back to Dublin or 1 moves back to Dublin and the other stays in the country pad. Dublin PDH is never put on the market and the bank BTL expires. Bank comes looking for their money and they can't pay because they have changed their minds about selling the Dublin PDH. Now the bank have a problem, particularly if 1 party is living in each property!! Either way this could have the potential to drag out for a long time if it goes wrong and would quickly erode any small profit the bank might make from a 300k BTL facility.
As an underwriter I would consider this to be far too risk and have too much potential to go wrong. I can't see any bank agreeing to it!!!

 

[Monbretia]

I couldn't see it being a runner either, as above poster said it's open ended bridging, haven't seen that in a good many years. Number one criteria for bank is always ability to repay and not the security, looks like all your friend has to offer is security.

 

[44brendan]

Even the security scenario would be dodgy!! Given the short term and proposed sale of PDH it used to be standard to accept a Solicitors LU over a property for BTL's. However SLU's are fine when everything goes to plan. In the scenario I presented above the SLU would be worthless if the clients decided not to sell the property. In my view BTL's are dead in the water as a lending option!!