bridging loan or another option

islegirl

We have a house valued at £90000 freehold and are keen to move to a bigger house. We have found one we like that is on the market for £170000.
Now what are our options - should we get a bridging loan while our house is on the market, keep our house and rent it out and get a new mortgage for the new house (we would have a deposit of about £10000), or wait and sell our house then rent and look for another house, in all reality the house we like would probably sell in the meantime.
We really like this house and I think the possible costs of a bridging loan would be worth it but have no experience in this and don't actually anything about it
any advice?

Doozergirl

How much equity do you have in your house at the moment?

islegirl

We have no mortgage on this property - we own the lot

CloudCuckooLand

You'll need £17k deposit on a £170k purchase. More if you want a decent deal. Plus probably £5k for fees and costs.

A bridging loan can be a useful tool if you have absolute certainty of the timescales involved. Taking one on when you don't know when, or even if, your place will sell is risky and could be expensive.

You might want to read up on the many threads explaining what is involved in becoming a landlord, here and on landlordzone.com, before making a decision to put your property in the hands of strangers.

DVardysShadow

CloudCuckooLand wrote: »

You'll need £17k deposit on a £170k purchase. More if you want a decent deal. Plus probably £5k for fees and costs.

A bridging loan can be a useful tool if you have absolute certainty of the timescales involved. Taking one on when you don't know when, or even if, your place will sell is risky and could be expensive.

You might want to read up on the many threads explaining what is involved in becoming a landlord, here and on landlordzone.com, before making a decision to put your property in the hands of strangers.

£17k deposit? Easy. Mortgage the first house for £75k. Bingo. Only need £75k loan for the second. Overall, meets the equity requirements if loans are with the one lender. The only issue is whether there is enough income to support a total of £170k mortgage.

Might need help from a broker

GMS

If you are happy to rent the current property out then look at the possibility of remortgaging on to a Buy to Let which could release the funds for the deposit on the new place.

Basically a 'Let to Buy' scenario.

Without knowing your circumstances it is impossible to know but with no current mortgage you should have options.

Have a chat with a broker to see how to proceed.

Bridging Finance could be looked at but is very expensive and you have no exit from it. Sale is out of your control and a remortgage to repay a bridging loan is difficult.

hazyjo

What if it took 3 years to sell yours? (Hopefully not, but certainly no guarantees in this market - and there have been many a story on here about houses up for over 2 years...)

Personally, I'd wait until I had a buyer, then start viewing - and I'd keep a very close eye on the market in the meantime... If you're in an area where things are still selling, it wouldn't hurt to look at a few and keep a reserve or two in mind.

Maybe the house will still be available when you get a buyer, maybe not - but I bet there'll be other choices...

Jx

sonastin

Another alternative is to lower the price on yours to try and get a quick sale. If you can get an offer on yours first then you can put an offer on the house you want and carry on with a normal sell&buy chain scenario. A lot of the houses we were considering when I first put my house on the market last December are still available, and I sold in August. Weigh up the amount you would need to lower your asking price by against the cost of extra finance charges and the hassle of owning 2 properties. Without knowing the circumstances I can't say whether this would be worth it but its worth considering.