How can I be a chain free residential property buyer?

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  • How can I be a chain free residential property buyer?

    Not directly related to my rental properties, but is there any way I can buy a new residential property without having to sell my current residential property first?

    I've just had my second attempt at a purchase fall through this year, after being undercut by chain free cash buyers (the first was an overseas investor, and the second was a property developer). Not sure you can call it gazumping given the sellers went for a lower offer, but very frustrating and disappointing nonetheless.

    What I always used to do was keep my previous residential property and rent it out, so that I could be a chain free buyer. Unfortunately the house prices have gone up so much and the rents remained relatively static, so this is no longer a viable option for me, i.e. the buy to let mortgage would only release enough capital in the current property to buy another of the same value.

    I'm also not keen on selling my current residential property and moving into rental accommodation first given I now have a family and don't want too much disruption for them.

    I have asked three different high street banks about bridging loans, and making lower offers to offset the costs of the loan, but none of them do them now. I've looked on the internet and found a few places, but they make me think of dodgy loan sharks. Does any one have any experience of them, and/or have any other suggestions?

  • #2
    Increase mortgages on your rentals, and use the cash to buy for cash?

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    • #3
      I too used to be in the position and it is very frustrating missing out on deals. You must keep trying and the deals will come. You need to be quick off the mark and explain to the agents you need some time or you will not offer, try and get them on side and build up a relationship. Other than that you need cash. I currently buy cash and in this game cash is king and speed to act is king, I usually don't offer more than other bidders but I know if I am cash they will usually go with me. It stops a bidding war and escalating the price but is very frustrating if your on the other side as I used to be.

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      • #4
        Originally posted by hech123 View Post
        cash is king and speed to act is king
        Behold, a kingdom with two kings!

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        • #5
          Originally posted by JK0 View Post
          Increase mortgages on your rentals, and use the cash to buy for cash?
          Yes, increasing the mortgages on the rental properties used to be a great option to raise additional cash. But in my case the buy to let mortgages are now rent bound, and while the property prices have increased dramatically the rents haven't, so I can't borrow more.

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          • #6
            Michaell appreciating your dilemma but how do you know you cannot release equity from the BtL , is it that you are already geared to say 75% or you are assuming the worse case scenario,.

            Much will depend on what the rental is , estimated value and are you a higher rate tax payer?

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            • #7
              If the rental income must cover 125% of the cost of the loan, and the cost of the loan is calculated on a notional rate of 5.5% rather than the actual rate, then the loan to value works out at less than 50%, i.e. it would take a 50% increase in rents to get the LTV up towards 75%. Since I last remortgaged the rents haven't moved, so I'm pretty much stuck with my previous maximum borrowing.

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              • #8
                can you perhaps share the rent and property value?

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                • #9
                  next time you have a btl void move in.

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