How does trading up mortgage/finance work?

Hi,

We are currently thinking of trading up and dont know what way the finances work, do we need to have our current home sold/sale agreed and sign everything at the same time or is there an in between loan we can get while we wait for ours to sell?

Thanks

It's always best to get your own on the market and, preferably, under offer before you start looking for a new home. In an ideal world both the sale and the purchase should close on the same day otherwise you would need to get bridging finance which can be difficult (and practically impossible if you don't have a signed contract for your sale). Make sure your selling agents informs anyone bidding on your house that it is subject you finding your next home.

Sarah

www.rea.ie

Hi.

Thanks for that. The problem is we are only really looking in a particular area and if we dont secure this house we are not that interested in moving until another one comes on to the market, we're reluctant to put ours on the market until we are sure that we have secured the new property. Our area is popular for 1st time buyers and house's are selling well so we're sure we'd secure an offer fairly quickly.

I'm in exactly the same position. I'm interested in a particular area, and suitable houses don't come up that often - perhaps 3 or 4 so far this year.

I have appointed an estate agent for my own property, the brochure is ready to go and I can be on the market at the drop of a phone call. I'm also mortgage approved.

I have found a suitable property and I'm bidding on it, without being on the market myself. I have access to sufficient funds to cover a deposit of 10%. However I've told the selling agent a little porkie, by indicating that I've got bridging in place. I think I'm going to have to come clean with him when I'm putting in my next bid and tell him that my bridging has fallen through. (I'm not the top bidder currently)

I have a couple of queries; firstly is this likely to cause a stink with the selling agent? After all, I'll be handing over a deposit of over 50K if I'm successful, and he'll get his pound of flesh, erm, I mean Fee, in due course.

Secondly is it possible to get bridging from my lender if I have 'Sale Agreed' only on my own property (which might take 2-3 weeks in the current market), rather than having contracts exchanged (which could take 8 weeks or more). I will be ringing my lender (EBS) first thing next week to ask them this, but if I knew one way or the other I'd sleep a bit easier this weekend.

The reason I ask is it could be possible to engineer the exchange of contracts in such a way that my sale goes through as quickly as possible, while the purchase drags on for a bit.

Of course I might be comprehensively out-bid next week, making all of this academic, but I'd still like to know.

Thanks for any advice you may have.

binman said:

I have appointed an estate agent for my own property, the brochure is ready to go and I can be on the market at the drop of a phone call. I'm also mortgage approved.

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One quick piece of advice, if you haven't already done it, is to instruct your solicitor to seek the title deeds for the property you're selling from the lending institution that currently has them. Delays in getting deeds can cause major headaches down the line, but if your solicitor has received them before you sell your own place there's no reason the contract couldn't go out within a couple of days of going sale agreed.

Witchfinder said:

One quick piece of advice, if you haven't already done it, is to instruct your solicitor to seek the title deeds for the property you're selling from the lending institution that currently has them.

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Excellent idea, thanks for that.

I've rang around about the bridging issue, and it looks like I need to have contracts exchanged, rather than sale agreed, on my property before anyone will advance me a bridging loan.

If bridging is advanced before the contracts are exchanged then it's called 'Open Bridging' and most banks are very reluctant to get involved in that, as they have no absolute guarantee that they'll be repaid until a contract to sell has been signed.

That leaves me with the question of whether this is going to go down like a lead baloon with the selling agent. He has told me that one of the other bidders isn't in a chain, which leaves me at a disadvantage (Assuming he's telling the truth, Whoops! Can open, worms everywhere...) The question is; how much of a disadvantage?

How much of a disadvantage depends on how much more you are willing to pay, and how quickly they want to sell, and if they have been burned before.
Maybe they are relaxed about timing and are willing to wait for you.

If they want a quick sale, they will run a mile from anyone without sale agreed on their own house, or open ended bridging.

A lot of sellers get burned by a buyer who bids load of money and 6 weeks later suddenly pulls out before contracts are due to be signed, because they can't sell their own. Seller then stipulates that they are only interested in people who are able to move quickly.

I agree about getting the deeds, you can claim that you are willing to move quickly, but if you don't have the deeds you have no choice but to wait.

I forgot to mention, if you are prepared to pay, apply for open ended bridging and see what happens.
A lot of lenders do not advertise it, but they are willing to do it for a good customer .

But, be prepared to be paying 3 mortgages for a while ( old mortgage, new mortgage, bridging loan). Also, be prepared for sleepless nights until your buyer signs the contract. You would be amazed how often buyers pull out.

Thanks for the advice, much appreciated.

In the end it was an academic exercise, as I was outbid and the vendor was looking for a quick sale in any case. Still, I learned a lot. Chiefly, being sale agreed on your own property is a big advantage. Also, the cost of getting building/refurb work done in Dublin is frightening.

So, I'm off to put my own on the market next week.

Thanks again for the advice.