Bridging Loan

EstellaK

Hi
This is a really thick question but can someone explain a bridging loan to me please!
I know there is open and closed but Im not really sure what amount you're borrowing and how they work the figures out??
thanks
Stella

Debs12

I have spent all day on this for myself !?!

It used to be that brideging was a nightmare as you used to have to borrow the full amount on at least one of the properties now it is not so bad if you lender will let you have two mortgages on the go! If they do all you need to "bridge" is the deposit you were putting down on the 2nd house and stamp duty. If this is a low amount below £25K you can get an answer very quickly and all you will be really due is the intrest for the period (in my case 4 weeks so around £100) so no problem.

If you mortgage provider will not let you have two mortgage on the go then you will have to bridge the full amount of mortgage on one of the properties and probably your deposit on the other place and stamp duty. The only place that seems to advertise there rates on this is Lloyds TSB I seem to have found. Here you will have a set up fee of 0.5% of the amount.

Now we have wether it is open or closed. Open is when you do not know when you will sell the other property! More risky for the bank so this is more expensive. Closed you know the date when this will end so less expensive.

It would cost me to bridge on £108K around £1,100 to give you an idea for 4 weeks on a close.

So first step is find out if your bank will let you run two mortages if you do not know when you will sell the other property try and change the mortgage to a "buy to let" or other type morgage.

Good luck.