Does bridging finance still exist?

pinkteapot

As per the title really - in the current mortgage market climate, is bridging finance available at all?

Before everyone jumps in and tells me how terribly risky it is, and completely non-MSE, I'm aware of that. If there are any deals available I can run through our financial circumstances and what we want to do, but I'm too lazy to type it all out if the idea is a complete non-starter.

GMS

Yes, bridging finance is still out there.

What is it you are looking to do?

As you say it can be expensive so explore all options first. Key to bridging is having the exit route planned so as to avoid penalties and unnecessary costs.

pinkteapot

Our situation:

House value: £250k
Mortgage outstanding: £41k

Therefore, equity: £209k
Cash savings: £50k
Investments (long-term but can pull out if need be): £15k

Net wealth: £274k

Combined gross salaries: £84k

Plan to buy a house for up to £425k (preferably £375-400k but we've set ourselves a limit of £425k). Stamp duty and other costs of selling/buying come to £20k. We plan to put £200-225k down (leaving us with £25-50k in the bank) and take out a mortgage for up to £200k.

All straightforward but....

The house we are in is easily sale-able. It's well and truly stuck under the £250k stamp duty threshold and in a popular area where things sell very fast, so long as they're sensibly priced. As long as we don't try and get £270k, it should sell.

The area we want to move to is really annoying. It's very popular but very few houses come on the market. In the last two years, only a handful have sold and half of those that did, did so before hitting Rightmove. We're waiting. A good house could come up next week or next year.

We're not currently top of the agents' list to call as prospective buyers as ours isn't on the market. We don't want to sell up and rent (which would be the sensible and MSE thing to do). EAs have said we should market, find a buyer, and make them wait. If they get impatient and decide to buy something else, the EA can always line up another buyer. But we're not overly keen as we'll feel under pressure to get out with a buyer waiting, and we want to wait for the right house as the next house must be a long term house, given the £20k cost of moving.

Are we in a position whereby we can wait until the right house comes up, put ours straight on the market but be prepared to take out bridging finance if ours doesn't sell immediately? If so, we can tell agents that we're not dependent on the sale of our house to make the purchase, and we'll jump up their priority list...

At this stage I don't know anything about bridging finance (apart from what it is and that it's expensive!) so I need to do a lot more research and try to cost it up, to see just what it'll cost us compared to selling and renting.

Is it available to people whose houses don't yet have a buyer, or is it purely for people who have a complete chain, but for whatever reason need to complete on their purchase before their sale?

ACG

All of that does sound feasible.

To give you an idea of rates it will be around 1-1.5% a month interest an then the set up fee is typically between 1-2%. All depends on the provider, LTVs etc etc but that should give you a bit of a rough guide to get you started.

Have you thought about using a broker? For bridging i dont think many lenders are available direct to customers and most go through brokers.

Dave_Ham

Accidental Landlord??

Tell the Estate Agents you are chain free and will rent out existing property and raise finance on it as a let to buy. You will get rates a third of typical bridging finance if you had to.

Once offer accepted, if you can sell your property quickly so be it as once ball is rolling you are there.

If you gave the agent for the seller the impression you would let them let your property then you may find yourself higher up that list still.

Good luck

pinkteapot

Thanks all - very useful food for thought!

Re the sneaky genius idea of let to buy... Do you have to have a tenant lined up before they extend the loan? (We talked about renting this out but don't want to for various reasons) And do let to buy mortgages all have exit penalties if you sell straight away?

If we ended up going for bridging or LTB then we would use a broker, yes. I'm happy arranging normal mortgages but would want help with these!

Good to know it's feasible on paper. Least I can tell the local EAs we aren't completely dependent on selling this.