Long-term mortgage used as bridging loan?

zsuzsa

Here's a our situation: we own our house valued at around 200K. We have an equal amount of savings: 200K. We'd like to move to a new property 500K max. We're trying to avoid getting stuck in a property chain so we're looking for a solution that would allow us to buy the new house without having to sell our current house first. Based on our joint income (80K) we could get a max mortgage of 300K (only just), which, together with our 200K savings would allow us to buy the 500K house.

My question is, what kind of mortgage would be best for us? As soon as we sold our current house, we would like to pay off its value (200K), leaving us with a more managable 100K mortgage. Would any long-term mortgages allow us to pay off such a large amount so quickly (within 6 months, hopefully) without any significant penalties?

Essentially, we would use a long-term mortgage as a short-term bridging loan. Is this possible? Has anybody done this before? Which lenders should we approach for such an arrangement? I'm just looking for ideas.

betmunch

There are product out there that will allow you to do this, as you will end with about £100,000 outstanding its not really considered short term finance.

You need to be a bit careful as you will have 2 properties for a while and some lenders will reduce your borrowing by quite a lot due to the 2 lots of households to run.

zsuzsa

Thanks, we'll take that into account. I'm looking at Flexible Off-Set mortgages. Would something like that make sense for us or is there a catch? We would want to pay off the remaining 100K as soon as possible as well.

betmunch

Thats one way of doing it, probably the way I would do it if I was in the same situation to be honest.

Not necessarily the best way as thats down to your personal opinion