Which Is Best? - Bridging Loan Or Short-term Mortgage?

mbamick

I own my current house outright, having completely paid the mortgage 2 years ago. It is valued at £185k-£199k. My partner and I have put in an offer of £333k on a house that we want to buy together. She has her 50% in cash, I need to sell my house to release the equity for my (£167k) share of the new house.

I'm about to put my house up for sale, but don't want to risk losing the new house because of any delay in selling. I've got used to not having a mortgage, so don't want to go down the buy-to-let road; retain my other property; and simply rent it out.

So I thought that a bridging loan, or short-term mortgage [with no redemption penalties] are 2 possibilities. My thoughts are still undeveloped; I expect that the bridging loan is quite expensive (say, 1% per month); that mortgage interest payments would be lower, but upfront costs would be higher (valuation, arrangement fee, etc).

I'd welcome any guidance and/or pointers.
Mick

Ian_W

I'm no expert but given the current housing climate where you may, but more likely may NOT sell your existing house quickly, I would have thought a reasonable rate mortgage without tie-ins could well be a better bet than bridging.

For example LTSB charge base + 1% for a closed [where you've exchanged on the new property] brdging loan but have a 0.5% arrangement fee. So 5.5% + £835.

Coventry BS do a 4.85% fixed to 2010 but with no early repayment penalties. Fees are £549 but there is a free valuation and legals package [though it's not entirely clear if the latter only applies to remortgages - but as you're buying you'd expect to pay legals anyway].

Not suggesting either are the best you can get, you'll need to do your own research, but on the face of it, I wouldn't discount a no tie-ins mortgage as your best option with houses selling quite slowly in many places. BoL.