Bridging Loans

HeatherKennedy

We are going to put an offer in on a house (closing date on Friday) but we haven't yet sold our own house yet. We understand their is another interested party that has a note of interest in as well as ourselves. The estate agent has told us that they don't have a property to sell. But they advised that we would have no bother selling our house as its such a good area and doesn't need anything done too it. If we put in a higher offer, should we state that we would be willing to get a bridging loan should they wish the date of entry to be quite soon? I am not sure if there are any other options that are open to us. We have nearly payed off our mortgage, only £13k left outstanding.
I would hate to think that even if we put in a higher offer than the other people that we would lose out just because our home was not on the market yet.
Heather

advent1122

HeatherKennedy wrote: »

But they advised that we would have no bother selling our house as its such a good area and doesn't need anything done too it.

Estate agents ALWAYS say that.
They told me that and I have had 3 viewings in 8 weeks with no sniff of an offer.
Can you afford to pay a bridging loan if your house takes a year to sell?

Amarillo

advent1122 wrote: »

Estate agents ALWAYS say that.
They told me that and I have had 3 viewings in 8 weeks with no sniff of an offer.
Can you afford to pay a bridging loan if your house takes a year to sell?

Totally agree, I have been told that before. I have never had a bridging loan but understand that you pay a certain amount of interest on the full amount borrowed per month eg. 1.5 percent, so pay £1500 each month for every £100k you borrow. I don't know if the figures will work with your house and the other house but I would be tempted to remortgage your house, put a big deposit down on the other house and a mortgage for the rest that you know you can repay comfortably for a year or so (as I'm going to guess it will be a fair bit cheaper than bridging loan), then when you do sell your house you pay off the mortgage or most of it on your current house. That way you are proceedable with no property to sell but won't be stuck with a costly bridging loan for ages.

Apologies if I have my facts about a bridging loan wrong, hopefully someone can correct me. I would be tempted to have a word with a good (ideally recommended by people you know who have been pleased with them) mortgage broker and talk the options through.

kingkano

Amarillo wrote: »

Totally agree, I have been told that before. I have never had a bridging loan but understand that you pay a certain amount of interest on the full amount borrowed per month eg. 1.5 percent, so pay £1500 each month for every £100k you borrow. I don't know if the figures will work with your house and the other house but I would be tempted to remortgage your house, put a big deposit down on the other house and a mortgage for the rest that you know you can repay comfortably for a year or so (as I'm going to guess it will be a fair bit cheaper than bridging loan), then when you do sell your house you pay off the mortgage or most of it on your current house. That way you are proceedable with no property to sell but won't be stuck with a costly bridging loan for ages.

Apologies if I have my facts about a bridging loan wrong, hopefully someone can correct me. I would be tempted to have a word with a good (ideally recommended by people you know who have been pleased with them) mortgage broker and talk the options through.

The problem with the METHOD you describe is you usually find it hard to have 2 personal mortgages (no problem if 1 is BTL of course). The OP needs to consult a professional to follow EITHER of these routes at any rate.

With a bridging loan you usually pay an arrangement fee (which can vary anything from 0.5-2.5%) + interest repayments which are normally 1%-3% above the BOE. There is much variation between these, sometimes you don't pay anything till the end, sometimes you make the interest payments each month, etc etc.

Whatever you do get professional advice, not just off a forum! Bridging loans are EXPENSIVE and shouldn't be your first thought. COnsider what you'd do if the house doesnt sell in 'x' months (while the loan is costing you) etc. And dont believe everything estate agents say :rotfl:

clutton_2

""tempted to remortgage your house" - IF you can do this - watch out for Early Repayment Charges - these can run to £thousands !!!!!

HeatherKennedy

Hi there
Ive since found out that the people selling are moving into rented accommodation until their new house is built. So apparantly they are flexible with their move date. Why could they not have said that in the first place instead of them saying they could move ASAP. Ive got a financial adviser looking in to us getting mortgage promose for a 100% mortgage for the new house with no tie ins just incase.
Heather