Bridging Loan

LateStarter

Hello All,

I'm semi-reposting - I asked about this in the 'Mortgages' forum, and the question wasn't really answered (and sometimes google just leaves you confused).

With a bridging loan:
1. Do you declare a bridging loan to the mortgage lender? Does that affect your chance of being approved or amount you're approved for?
2. What's the security for the bridging loan - surely the property is solely secured to the bank ?
3. How do you repay a bridging loan - is it monthly or at end of term? ( Repaying a loan and a mortgage every month would really not be ideal).

TIA

eddddy

It depends what you are trying to do - i.e. what you want the bridging loan for.

e.g. Is it this:

- You own house 1 with a mortgage
- You want to buy house 2 with a bridging loan (secured on house 2)
- Once house 1 is sold, you want to raise a mortgage on house 2

(That would be a typical bridging loan scenario - and it can be very, very high risk!)

If so:
1. You don't have to tell the lender for house 1, but you would need to explain the situation to the lender for house 2

2. House 2 is the security for the bridging loan

3. Either monthly interest or added to the final repayment - it depends on your preference, and the lender's.

LateStarter

The scenario is:

1. Existing mortgage on house 1 (in g/f's name) which has equity we can't get to. House 1 is for sale.

2. We want to buy house 2, and need a bigger deposit, as maximum affordabilty limits mortgage we can get.

Can the bridging loan go against house 1? Who could I get proper advice on this from, as I gather the bridging market is not as tightly regulated as mortgages?

TIA

Argh.

penguingirl

LateStarter wrote: »

Can the bridging loan go against house 1? Who could I get proper advice on this from, as I gather the bridging market is not as tightly regulated as mortgages?

An independent mortgage advisor would probably be a good start. But all I know is that bridging loans are often very expensive. Personally I would focus on selling house 1- it would be worth comparing the fees of a bridging mortgage compared to a drop in asking/ acceptable price. Why is it not selling?

LateStarter

penguingirl wrote: »

An independent mortgage advisor would probably be a good start. But all I know is that bridging loans are often very expensive. Personally I would focus on selling house 1- it would be worth comparing the fees of a bridging mortgage compared to a drop in asking/ acceptable price. Why is it not selling?

The mortgage advisor I spoke to never mentioned a bridging loan (and I didn't know enough to ask).

House 1 had sold, but buyers dropped out in December (a couple weeks before exchange), and with Christmas etc, not much new has happened. And we need 50-60k more to get house 2 (don't quite think they sellers would drop by that much).

We've had an offer accepted on a much cheaper property (house 3, lol), but the seller is messing us around, so we're back to considering house 2.

Oh the joys :mad:

penguingirl

LateStarter wrote: »

House 1 had sold, but buyers dropped out in December (a couple weeks before exchange), and with Christmas etc, not much new has happened. And we need 50-60k more to get house 2 (don't quite think they sellers would drop by that much).

Sorry, I meant a drop in the asking price of house 1 i.e. to get a quick sale, not a drop in your offer on house 2.