Bridging Loan Question

mbeadle

Is anyone able to give some advice on closed bridging loans

I'm in the process of splitting with my ex and selling our jointly owned property and both buying alternative properties (one sale, two purchases). We are able to exchange on one sale and one purchase (mine thankfully) pretty soon but cannot exchange/complete on her property until November time due to probate issues and our buyer is happy with this date. My sale isn't happy as they are buying a new build and want to complete in October so I was thinking to take out a bridging loan after exchange so I can complete much earlier on my property. The finance of two mortgages and interest is it not an issue as its only approx a 6 weeks gap and if her sale falls through its not a problem.

What I am not sure is how a bridging loan works, do you borrow the deposit shortfall and complete with my new HSBC mortgage or do I borrow the full purchase price and then activate the mortgage on the completion of our sale and hopefully the second purchase when I have all the monies in the bank.

We have 40% equity in the current property and the whole process is amicable

Thanks anyone in advance

eddddy

mbeadle wrote: »

....do you borrow the deposit shortfall and complete with my new HSBC mortgage....

That would certainly be the cheaper option (as bridging finance is typically much more expensive than a mortgage) - but would HSBC release funds for a new mortgage, before your current mortgage was paid off?

HSBC may refuse on 'affordability' grounds. Ask them.

If so, you would have to go for the more expensive option of completing with bridging loan funds.

Again, it's probably best to check with HSBC - as technically, you would not be a 'Home Mover'... you would be taking out a mortgage on a home that you already own. The rules may be slightly different.

Dave_Ham

Ok, you need to be super careful here as there are many considerations.


Firstly, you take out bridging finance and you will not be able to take out traditional finance for 6 months minimum. There is about 4-5 lenders where this is not the case, but not HSBC I am afraid.

Secondly, the affordability questions raised are valid and HSBC are one of the less flexible on these types of arrangements.

My view is this starts and finishes with the developers again rushing things.

No buyer will get close to the deadlines, just tell them your dates and confirm they are that or nothing as you have perfectly valid reasons.

Any mid term finance, is going to be tricky and likely to be expensive.

You can always exchange and set a longer completion date so everyone has confirmation..