Use of Bridging Loan?

berneslai

Hi,

I've just placed my property on the market and upon sale I should release equity of around £50k. However, I am interested in a house which is going to be sold at auction at the end of this month (£250k). The problem is that the auction house demands a 10% deposit if I am successful with my bid, but my own home is unlikely to be sold within the next 3 weeks.

How would I go about getting a loan for the £25k I need? It's obviously risky as I may not get the property at auction. I can afford the mortgage for the new place alongside my existing home for a short period of time, but the deposit is a step too far.

Could I organise a mortgage of £225k and get a bridging loan for the £25k (repaid when my home is sold)? Is this a feasible idea? I can't really remortgage my current property as I am locked into a 5 year fixed term mortgage (currently in year 3) and would face a penalty payment of £2600.

Thanks if anyone can help - I'm really confused!!

Bernie

Conrad

Top - up your existing mortgage by way of a further advance with same lender. This is only the beginning.

It is highly unlikely your place will be fully sold tp legal completion within 28 days so this means you need to arrange a mortgage on the new place for the balance and then repay it after your existing place completes.

berneslai

I doubt my lender (Halifax) will be responsive to my request. I've still got two years of my fixed term to run and penalty/administration fees will be nearly £3,000 - or they'll waive them and change the penalty/term for the new mortgage.

F_T_Buyer

You could get a short term loan fixed on your home. Halifax would probably do this.

But is this really a wise idea? Not only do you have to put down a 10% deposit, you will have to pay the full balance in (30) days? What if you can't sell your old house? What if you sell it for less than you thought? What if your new mortgage lender won't lend as much as you hoped on your new house?

follyfoot

ask a private investor - there are many who are prepared to loan money on short term basis but you will have to pay more interest than a bank loan.