Short term LARGE loan

JBGrafo

I need to borrow a large amount to fund a property purchase. Its just for 6 months to enable us to continue living in our current home (owned outright) whilst building work takes place.Once the work is finished the current house will be sold to pay off the debt, It's either that or live in a caravan on site. Any suggestions?

OneLife_OneShot

Yeah, start saving.

JBGrafo

Thank you, we have savings, they will be funding the building work. I just wondered if anyone could think of an alternative way to fund the purchase rather than the obvious route of selling our home and living in a caravan. I know a lot of people do just that, probably because there is no alternative.

CLAPTON

facts always help

some people would consider 1,000 as large
some people would consider £1million as small
your income is relevant too


probably remortgaging your current property is the best solution assuming you have a sufficent income

Typhoon2000

A bridging loan may be suitable.. But they may want to see evidence that you are actively marketing your current place ( easy enough I suppose).
Will costs lots if you can't sell your existing place quick.

bouncydog1

A bridging loan should only be seen as a very short term solution because of the usually high interest costs involved.

Personally, I would market the property you are currently living in and see what the response is. If you get lots of responses and even better an offer, then at that point I would sell and see about buying the other property.

You run the risk of being saddled with the large loan on the new property that you will have to fund the repayments on, and being stuck with the property you have or being forced to drop the price to sell it quickly.

Have you also done your homework on what the new property is going to cost to develop and built in a contingency of c30%? IME property development whether renovating or building from scratch never comes in on target. If you go for a bridging loan the bank will also want to see all of these budgets.

Robisere

bouncydog1 wrote: »

A bridging loan should only be seen as a very short term solution because of the usually high interest costs involved.

Personally, I would market the property you are currently living in and see what the response is. If you get lots of responses and even better an offer, then at that point I would sell and see about buying the other property.

You run the risk of being saddled with the large loan on the new property that you will have to fund the repayments on, and being stuck with the property you have or being forced to drop the price to sell it quickly.

Have you also done your homework on what the new property is going to cost to develop and built in a contingency of c30%? IME property development whether renovating or building from scratch never comes in on target. If you go for a bridging loan the bank will also want to see all of these budgets.

EXCELLENT ADVICE!

But if you decide to carry on with your Bridging loan, take heed of a lesson from friends I know who did something very similar.

They lived in their property, budgeted for a new build. The new build cost almost 1.5 times the original cost estimate and took much longer than the original time estimate. They could not sell their original property for almost 2 years and were forced to sell the new build. Now they are sadder, wiser and living in rented accommodation. Be very careful. And get a written quote of build time and costs, using a good solicitor to review it. May cost a relatively small sum, but worth it if you encounter problems..

bargainbetty

Sell your home and rent a small flat nearby. Put as much stuff in storage as possible to enable you to take the smallest possible flat you can bear. Why do you have to live in a caravan?

claret_mike

As above really

Would it be cheaper to remortgage home on a product that has no early repayment charges.

You can then look to get on with your build.

Put your house on the market and if it sells, you repay the loan and take any excess equity out of property.

This will obviously depend on credit worthiness/income etc..

27col

From experience, I can say that living in a caravan while building a house is a good incentive to crack on with it. Especially when the weather is like it is at the moment. It was so horrible in our van that we moved into the house well before it was finished and sort of camped in it. Heigh ho, those were the days!

jonesMUFCforever

If OP owns a property outright then he should be able to raise a mortgage on it to do what he wants as long as he passes the credit score and can afford the repayments.