Bridging loan? or another way?

mmagenta

We have had an offer accepted on our dream house of £152k. Have accepted an offer on ours of the asking price [£130k]. but the buyers havent sold theirs yet..and its a big house they are selling so not really FTB material, hence more chain below them..

The house we are buying has no upper chain.

What im trying to figure out is.. what to do..
we dont want to lose the house and need to move soonish to meet the deadline for application to the local school [part of reason for moving]

If we were to re market our house we would probably have to drop it to £125k to get FTB's interested [to get below stamp duty threshold] so immediately lose 5K anyway..

Is this the kind of situation a bridging loan would be used? How expensive are they [I cant find any calculators on google] and It seems you can only borrow 85% of the valuse of the house you are selling? [which would be £110k]. Would that mean I would have to find the shortfall [£42.5K] myself??? How does it work?

What can i do? Im a bit lost.

Thanks

wecanhelpu

Here's a couple of good articles

http://www.thisismoney.co.uk/mortgages/mortgages/article.html?in_article_id=407211&in_page_id=58

http://www.thisismoney.co.uk/bridging-loans

Make sure you understand what you are doing and have got a safety net.




best wishes

silvercar

How easy this will be will depend on the size of the mortgage on your existing home. if you have no current mortgage you could just get a 100% mortgage on your new home.

You could go for another residential mortgage if your salary/affordability could justify it or a BTL mortgage on your current home.

Just make sure you have a way of funding it for a good few months!

mmagenta

Thanks for those..v interesting and useful. Im still getting my head round the concept of bridging loans so all info v useful.

I have been looking at this product http://www.first-bridging.co.uk/mortgage_gap.php

What Im confused about is it says
The Mortgage GAP bridging loan is designed to allow the purchase of your new property to complete by supplementing any personal cash or mortgage offer you have for the new property and simultaneously paying off your current mortgage if you have one.

So does that mean you will only have one mortgage? and not be stuck paying two mortgages simulatneously?

IS this a normal bridging loan or something else entirely ?

Will I need to make up the shortfall?

Im thinking that if we remarket the house to FTB we will lose the 5k anyway so something like this may work but im v nervous about the concept as everyone seems to advise avoiding bridging loans ;-(

Thanks

mmagenta

Afraid we do owe 56K on our current home to Egg and our salarys arent good enough to be allowed 2 mortgages together ;-(

We do have a bit of savings[about 5k] to fund it for a couple of months. but not for too long ;-( depending on how horrifically expensive it is..
but like i say if we re market we will have to drop house by 5k anyway to get under stamp duty threshold [125k]

Thanks for all this help. This has been really stressing me out ;-(

silvercar

from the same site:

Security for the loan is taken by way of a first charge on your existing property

So their security is a mortgage on the property you are selling. They will only loan upto 80% of the value of your original home.

wecanhelpu

As i said in my first post - make sure you understand what you are doing.


Why are you so keen to move?

mmagenta

Thanks.. yes this is is why i need to do lots of research.. have bought houses 3 times but never had to deal with a bridging loan so its a totally new concept for me to check out.. all this help is v useful. Thank you.

re keen to move.. Im hpeing all will come together ok without needing to reosrt to bridging loan.. but Im just checking out my options just in case. I am just worried about losing the house as it is a perfect one for us in an area that never comes up in our price bracket [this one needs lots of work] , with a great school.. so basically,if we miss it the chance of finding something again is v slight.. ;-( .. and also.. like i said we need to try and be moved in before the deadline ends for application for the school. That is still a bit off so we do have a bit of room for manouver.. but I like to know all my options ahead of time. Im a bit of a control freak ;-)