When you are sitting outside the property market looking in, it is generally hard to feel much in the way of sympathy for those who are already jumping on to the second or third rung of the housing ladder.
After all, why should you feel sorry for the lucky characters who are already sitting pretty, in exactly the position that you would like to reach?
The point to remember when thinking such dark thoughts is that some day, hopefully not too far away from now, you will be in exactly the same position as those people you so resent at the moment. Not only will you have that troublesome first purchase behind you but, all going to plan, you will be ready to move on to bigger and better things. And at that point you will realise that owning a property can bring its own challenges.
Chief among these, at least for those homeowners who are considering trading up, is the decision on whether or not they can afford to keep the first property as an investment. To those still outside the market, the choice might look like it is based in greed (how much can I make out of this?) whereas to those already in ownership, it can take on more of a fundamental meaning.
Should I try to keep the first place and finally begin to cream my living off the rest of the (tenant) populace? In an ideal world (at least for the landlord) the answer would be yes, but practical considerations such as short-term cash flow often dictate otherwise. After all, it will usually be difficult to fund the second house purchase without selling the first place in advance, or at least trying to arrange for the sale of one to coincide with the purchase of the other.
This is compounded by a situation whereby lenders are generally unwilling to supply open-ended bridging (where the extra get-over-the-hump loan is offered on the basis of the first house not yet being sold) and second-time home-buyers tend to have little in the way of personal savings to get themselves over the line.
The key question to ask in this kind of circumstance however is how hard it would be, in real life, to secure a mortgage for the second purchase while maintaining ownership in the first.
One lateral solution that might not initially strike home, for example, is that it may be possible to top up the first mortgage while negotiating the second loan. In this way, the equity in the first house can not only help an individual to purchase a second but it can allow them to tap into a future of rental income.
Another solution for more fortunate buyers would be to approach a group of friends or family to seek a collective interest-free, short-term loan that would bridge the gap between buying the new place and taking in the initial rent from the first.
Whatever the obvious answer however, it will always be worth the while of buyers in this situation to seek professional financial advice on the best option for them. In some instances, it may be possible for trader-uppers to hold on to the first place without losing out on the second even when they don't realise the happy truth themselves. As always, it will be a good idea to take a bit of a look around before leaping into an important financial decision.
