Selling my current home and buying a new one.. What are my options.

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gazzer

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Hoping somebody can give me some good advice here.

Because I am living in an anti social nightmare in my current house (the area is really bad) I have decided to move jobs to a new department (I work in the civil service ) and hopefully I am going to be moving to Cavan with the new job some time towards the end of this year. Im planning to put my home on the market and also buy a new one in Cavan.

At the moment the outstanding mortgage amount is 215,000. I got the house valued just before xmas and I was quoted 315,000. I imagine that figure is lower now with house prices falling.

I have looked a few houses on the Cavan/Meath border and they are averaging around 300,000 euro. Myself and my partner are planning to go for a new home so as to avoid stamp duty.

Now the thing is myself and my partner only have 10,000 in savings.

On top of that we have a car loan and a bank loan that has 25,000 still to be owed on it.

I have never been in the selling a house at the same time as buying a house scenario before so Im not sure what way the mortgage process will go.

Here are my questions:

1. Would I have to clear the outstanding bank/car loan before I could get mortgage approval to buy my new house?

2. How would I get the deposit together to put down on a house I like? I wouldnt have any available cash until such a time as my house was sold but obviously I would need some money to put a deposit on the new hosue. Would the bank give me a bridging loan for the deposit?

3. Or would I be best to remortgage my current house and make sure I get some extra to clear my bank/car loan and some more money for the deposit for the new house. If I did that the remortgage figure would be around 270,000. Im not sure if I would get that amount if the value of my house is less than 300,000 at present. However if I did get the money I could then apply for the new mortgage for the new house a couple of weeks later.

Im not sure what to do. I just want to get out of where I am and move to a new area. Im not looking to make a profit or anything but I just want to know the cleanest way to go from selling my house to moving into a new one. I was planning to put my house on the market next month with the aim to be in my new house by September. Am i being totally unrealistic?

I would really appreciate any advice you guys had.

Thanks

Gary
 
In a rapidly moving market, I'd suggest getting a bridging loan but that's a very dangerous strategy in a slow market and could cost you a lot of money.

To be absolutely honest, I think you could be biting off more than you can chew: you're looking at selling current house, moving to somewhere you may not know well (?), new job and trying to get a new house, all in one transaction.

My advice would be to rent around the area you'd like to move to, and give yourself some breathing space before you make any irrevocable decisions. There can be incredible stress involved if you're in a chain, buying: renting, you get time to settle in and get a good idea of exactly where you want to live - or don't, and avoid making an expensive mistake!

If you're hellbent on doing it all at once, talk over your options with a good broker and see if they can give you any suggestions. I can recommend REA from personal experience. Talk to your local estate agents too: if you don't already know, they may be able to give you valuable information on how quickly / slowly houses are selling in your area.

The very best of luck with all of it, and I hope it works out for you.
d
 
I have actually done this and it has worked out. Try to find a new development with a completion date of about 6 months into future. Put your refundable booking deposit down. If you can get the same EA that is selling the new homes to look after the sale of your own. Then it is in their interest to sell both, and also they can liase with builder. When your own home is sale agreed and contracts signed - then sign the contracts of your new home. If you sell your home quicker than anticipated you may have to rent for a short while. It all depends really on how much of a demand for the your new home is - i.e. if someone not in a chain is looking to buy it then the builder will probably sell to them. But this may work out for you as it did for me.
 
Regards your deposit you will only around 4/5,000 for a booking deposit. When you sign contracts you pay 10% generally but you won't be signing any contracts until your house is sold. Its also worth noting that many new developments now don't do stage payments and just take small deposit to book and balance on completion so this might ease the burden on you a bit
 
Thanks everybody for your advice. We think we have a plan in place now.

I visited a couple of banks/mortgage advisors over the last 2 days and we have decided to do the following:

1. For the rest of this year we are going to rent out a house in Dublin (possibly Castleknock or along the Navan Road area) while we both are still working in Dublin. We have a dog so I dont know if that is going to be a major problem in getting a house to let.

2. We are going to rent out our current house. I dont envisage a major problem with that as our house is very near to Ballycoolin Ind Est and Blanch S C and a lot of houses in the estate are been rented out. Our mortage repayments are 1300 a month and houses for rent in our area are going for between 1250 and 1400 so as long as the rent covers our mortgage repayments (or even if I have to put an extra 50 or 100 euro a month to it) we will be happy.

3. As soon as we have a definite date for our move to Cavan we will start actively seeking out a house. My partner is from Cavan and has a brother in law who is an estate agent in Cavan so hopefully with a combination of their knowledge we will get a good home in a good location.

4. After a year or so we will look at the property market and see if we want to sell our current home. We may decide at that point to continue renting.

The only problems I can envisage is with us getting a house to let in Dublin with a dog. Im sure though that not every landlord will have a problem with that. So what do you guys think of that plan? It will give us some breathing space. The move to Cavan is through decentralisation and as you all know the goalposts for that keep changing so I could still be in Dublin in 2 years time.
 
New to this so not sure if this is valid, but won't you have to pay tax in the rental income?

If you decide to sell after a year, might you not get caught for Capital gains as it would not have been you Principal Private Residence over that timeframe?
 
You will also have to pay stamp duty clawback if you bought your current house in the last five years. (The budget changes were not retro-active.) And if you are claiming trs on your re-payments you will lose that.

I would honestly sell your house now, and find somewhere to rent. There is absolutely no benefit in keeping your current home. Prices are not rising, so at best you will be subsidising your tenants for no gain to you. And should prices fall further, you will have paid to lose even more of your potential sale value. And if prices fall enough you could find yourself in negative equity and be unable to move.


Also if you sell and rent you will be chain free, with a deposit to hand, so you will be a more attractive buyer and may find you can negotiate a better deal.
 
You won't have to pay the stamp duty clawback if you've been living there two years, once the property is rented after budget day 2007 (4th/5th december?) you only had to be in two years.
 
I have been living here for 6 years so the stamp duty problem isnt a issue.

If I wait to sell my house I could be wating for a long time in the current market. I cant afford to pay a mortgage on this house and rent another one.. Well I could for about 3 months maybe but no more than that. I want to get out of where I am living asap so I really think renting out the house is the only option at the moment as I reckon I will get somebody to rent the house far far quicker than selling it.

As regards paying tax on my rental income. As far as I am aware(though I have to double check this) I can write off the mortgage interest portion of my mortgage (1100 a month at present) as well as 12.5% wear and tear allowance so even if I do end up paying some tax it would be that much(I think). My brother works in the tax office so I will ask him.

Im not sure about the capital gains tax.. again I will have to ask my brother about that.
 
The tax implications of renting out a former PPR (Principal Private Residence) are covered many times in many existing threads.
 
gazzer said:
If I wait to sell my house I could be wating for a long time in the current market. I cant afford to pay a mortgage on this house and rent another one.. Well I could for about 3 months maybe but no more than that. I want to get out of where I am living asap so I really think renting out the house is the only option at the moment as I reckon I will get somebody to rent the house far far quicker than selling it.
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Do you not think that this will cause you problems with tenants? If you hate it there so much how do you expect somebody else to continue renting there? If it's as bad as you feel it is your tenants will be moving out every couple of months.
 
@ iguana. In an ideal world I would put the house on the market next week and have it sold by May 08 but I really dont think that will happen.. even if I advertise the house for 10 - 15% less than what other houses in the area are going for.

If I advertise the house for a lot less than other houses surely people are going to get suspicious and wonder why it is so cheap?

I need to find a happy medium and if I can sell the house by May or June 08 then I wouldnt rent it out.
 
gazzer said:
@ iguana. In an ideal world I would put the house on the market next week and have it sold by May 08 but I really dont think that will happen.. even if I advertise the house for 10 - 15% less than what other houses in the area are going for.

If I advertise the house for a lot less than other houses surely people are going to get suspicious and wonder why it is so cheap?

I need to find a happy medium and if I can sell the house by May or June 08 then I wouldnt rent it out.
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Maybe you can try to sell it in a non-traditional way. Advertise it for sale at a price substantially lower than anything similar and put on the advert that you will sell it for the best offer that you receive by March 31st. If you don't get an offer by then which you are happy with you can just take it off the market, you aren't obliged to sell it. But if you do then you can sell it and save yourself a whole lot of hassle of being a landlord and potentially losing money if prices drop further.

I know what it is like to own a house I have come to hate living in because of certain neighbours. It will feel like an albatross around your neck if you can't move on from it.
 
Im in the Same situation our house goes on the market tomorrow, we are gonna rent near where we want to buy but are unseure of weather we can get a mortgage while we have the other one up for sale any advice ??
 
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