Bridging loan or buy to let??

dotty_totty

Wondering if anyone can give us a bit of advice!! We are selling our right to buy council house for approx £150-160k. (going on the market tomorrow, can't complete until beginning of nov, due to repayment of discount). We have seen the house we really want, but it is a repossession property so i'm assuming the repo company will want to move fast. This property is marketed at £250 and we would hope to offer £230-240 max. We have a 57k mortgage outstanding on out property and no other debt.
If we dont want to wait for a buyer for our property (risking the other property being sold) would you advise that we a) try to arrange a bridging loan and if we could how much would it roughly be? or b) change our current mortgage to buy to let and approx what would the difference in £'s be. We have AIP for £250.

Thanks in advance...my head is pounding trying to get around the figures etc.

silvercar

If you have an AIP for £250k, why don't you just take a 100% mortgage on the new property and make sure you pick a mortgage with no redemption penalties. Then when you sell your current home you can use the equity released to reduce your new mortgage.

I wouldn't change your current mortgage. Firstly the costs of doing so would be unnecessary and secondly your selling it soon. You couldn't change it to BTL as your not letting it.

dotty_totty

I think i may have typed it up wrong...we have AIP an additional £100k to add to the £150 we are selling for to make £250k.

ailuro2

We were charged 2% on top of the interest rate for our bridging loan, aswell as an arrangement fee, so make sure you ask about the charge sin advance before you decide.

Mrs_pbradley936

The house you want will not necessarily be sold before you can act. They have to get firm offers and then advertise the highest offers in the local paper before they can close the sale. Do not rush into doing anything which will cost you money when you may not have to.

Mrs_pbradley936

Also if you do proceed with the sale get a mortgage with the Halifax on the new place because they offer a faciliy whereby you can run two mortgages for three months provided your buyer has a mortgage offer in place. My friends have just done that because the sale of their place fell through and they did not want to lose the house they were buying. They had a new buyer within a few days but she was not able to exchange by the end of the week so they will own both places for about 7 weeks.

PoorDave

pbradley936 wrote:

Also if you do proceed with the sale get a mortgage with the Halifax on the new place because they offer a faciliy whereby you can run two mortgages for three months provided your buyer has a mortgage offer in place. My friends have just done that because the sale of their place fell through and they did not want to lose the house they were buying. They had a new buyer within a few days but she was not able to exchange by the end of the week so they will own both places for about 7 weeks.

Although keep in mind that Halifax might not be the best deal in the long run, so maybe make sure any mortgage you get from them does not tie you in for too long.

Nevertheless, that sounds like a good product to go for to sort out your problem.

I know this doesn't help, but why put it on the market so early before your November date? Seems like it might put people off a perfectly good house without good reason, although it could easily take 12 weeks from initial vieiwng to completion. It would make me have second thoughts if i found this out.

PoorDave

dotty_totty wrote:

I think i may have typed it up wrong...we have AIP an additional £100k to add to the £150 we are selling for to make £250k.

Hang on a sec...

You sell for say 150k, but have to pay off 57k existing mortgage, leaving you with 93k equity. Add on the 100k AIP and you only get 193k, not the 230k minimum you're thinking of spending. Am i missing something?!

Even if you sell for you max of 160k the figures don't seem to quite work.

dotty_totty

PoorDave wrote:

Hang on a sec...

You sell for say 150k, but have to pay off 57k existing mortgage, leaving you with 93k equity. Add on the 100k AIP and you only get 193k, not the 230k minimum you're thinking of spending. Am i missing something?!

Even if you sell for you max of 160k the figures don't seem to quite work.

Sorry, i'm not very good at explaining am i??:o
When we spoke to financial advisor they said based on wages, outgoings etc we could look at buying a property up to £250k...got there eventually

PoorDave

dotty_totty wrote:

Sorry, i'm not very good at explaining am i??:o
When we spoke to financial advisor they said based on wages, outgoings etc we could look at buying a property up to £250k...got there eventually

That's what i figured...just checking!

Hope you sort it all out

dotty_totty

The property was on at £275 for approx 6 weeks and yesterday was reduced to £250. How long do the repo companies usually leave them on the market for after the first reduction? Ive been told usually only 2 weeks then they go to auction :eek: