bridging mortgage advice

badback10 · 17 February 2010 at 2:40PM

Hi,

I am trying to move house. I have found a property I like yet still have to sell my own. A family member has offered to bridge the gap i.e. so I don't need to sell as part of a chain and I can get moving on the new one.

However I talked to an IFA and they say its not possible as I need to continue to pay for the old mortgage and if i repay it I will be due an early repayment charge.

All very confusing but was wondering if anyone else has had similar problems.

Ta

Milliewilly · 17 February 2010 at 3:49PM

So theres no problem in buying your new one as you can borrow from a family member. In that case you could leave your old house and keep paying the mortgage on it - but it will be unnocupied so check with your insurer and lender. When it (hopefully quickly) sells then move the mortgage onto your new property (if its portable) and pay the family member back. There may be complications with stamp duty here but I am sure someone more knowledgable than me can advise.

Some lenders will waive the early payment providing you take up the loan again in a 6 month period so may be worth asking.

A word of warning - I have seen well intentioned bridging loans turn sour when the house fails to sell (in this case 18 months) and the seller is rejecting offers because of what he 'needs' for the house without consideration to the people who are losing money on their cash lump sum that could have been invested elsewhere.

delmar39 · 17 February 2010 at 4:05PM

This is the problem with looking before you've sold or at least accepted an offer. Unless you sell you'll have two properties, one with an existing mortgage. If you had sold you could 'port' your mortgage to the new place thus avoiding the penalties. You could rent your place out, but this to be honest could be more hassle than it's worth. I think you need to sell and quick.