Mortgage / bridging loan - what do I need?

ls679

I own outright a property worth £230 - 250k.

I have seen a property I wish to buy. The vendors will I think accept an offer of £190-200k.

As I have not yet sold my property how could I finance the purchase of the other property?

My annual income is about £24k net and I have savings of about £20k but would need some of those for buying costs, stamp duty etc.

The plan would be to market and sell my current property asap, but the property I wish to buy is a reposession and while representing excellent value I need to move swiftly to secure it.

Thanks for any advice offered.

Sammy85_2

A bridging loan will be very expensive, if you are unable to sell your house for a long time then it will be very costly.

If you take a mortgage then you will be most likely tied in for at least two years.

You will need a minimum deposit of at least 10% for the new house, that would take up almost all of your savings, leaving next to nothing for stamp duty & fees.

Have you appoached a lender yet to see what mortgage they will give you? My mortgage advisor told me that the maximum i would be able to get is 4x salary (gross) nowadays (if very lucky), so based on that you would need £47k gross income to get the £190k mortgage you require.

AAD1975

A bridging loan would work for you in this situation. A bridging lender would typically take both your current property as well as the new property being purchased as security for the loan. This would be required in order to bring the LTV down to realistic levels.

The bridging loan would be repaid as soon as the current property is sold.

In my experience, (1) Cheval and (2) Masthaven both provide excellent service for bridging loans. Cheval allow for online submission of both initial enquiries and full application forms.

calebdylan

you need to produce the necessary original documents of the property may be you are asked to produce some other documents depending on you loan amount......

vegasvisitor

Another option could be to take out a buy to let mortgage on your own house, then release enough money for the deposit and to take down your loan amount to the required amount for your salary multiplier.

So, if you buy at £190k, say you can borrow £100k, you will need to release about £80k from your own property to fund your deposit along with some of your savings.

If you get your own sold though, you'd want to be able to cancel the mortgage which might be tricky as they have high set up fees which you might have to pay in advance (not sure how far though)

This is a shame - perfect example of how the market is so tricky even for those in a good position!

If you are very keen to move rather than this being a one-off opportunity, why not try to sell up anyway and then buy? I am thinking though that maybe this is more of a unique opportunity and you might not want to sell in general?