Bridging Loan - good idea?

cuffie

Hi there
Anyone got any experience of this? I presume if our mortgage all sorted and approved, if we were going to do it, we need to find the bridging loan for the cost of our house?
Our buyer pulled out after we found a house, fell in love with it, have had searches, valuation, mortgage approved. I know the ideal solution is to find another buyer, but if it meant losing the house we love, is it wise to think about a bridging loan, or just a waste of money.
Thanks. xx

Ian_W

Whether it's a waste of money, only you can decide. But bridging loans don't come cheap. LTSB, for example, charge 1% arr fee and BoE BR +2% [6.75%] for an open bridging loan which yours would be as you haven't exchanged on yours yet - see
https://www.lloydstsb.com/rates_and_charges/loans_rates_curr_page.asp#bridging%20loan
Other banks don't charge as high an arrangement fee but a higher interest rate.

I'd speak with your EA and the vendors EA. Try to get your EA to remarket the property with a view to an urgent sale, maybe even considering lower offers if needs be. Keep the vendors, thro' their agent, up to date with what you're trying to do.

If the market is slow where you are it might mean it's a while before you get another buyer but, of course, it works the same for your vendor. Before you consider bridging try to get another buyer and be sure you can afford both your present mortgage and the loan on your new house.

rsvtoddy

Having gone with a RBoS bridging loan for about 18 months (v similar to the LSTB rate above) I would suggest looking at a buy to let mortgage.

I've just changed mine to the Coventry B Soc and it's about £165 per month cheaper, with smaller redemption penalties. You could then rent it out if you have problems selling it.

F_T_Buyer

How long could you afford a bridging loan for? What happens if it takes 12 months to sell? What if interest rates rise further? What if you can't sell for what you hoped? What if a future buyer's survey found £xk of work needs to be done?

Bridging loans are very risky, and many people got trapped with them in the 90s when the housing market turned downwards as they never conceived it could go wrong. If I were you, I would sell your old place first.

theGrinch

BTL mortgage would be better, ideally one with no redemption charges. also watch out on arrangement fees. more and more lenders are charging 1.5% on BTL lending.