Advice on Bridging Loan

Mullroy

We have a chain in place to sell our house and move to buy another property. This new property is going through probate. However, the property we want to buy is in hot demand and is being chased by a number of potential buyers.

Even though we have a chain in place that is ready to move, the agents acting on behalf of the sellers want us to exchange contracts on our current property before we exchange on the new property. We don't like this - because we could end up without a roof over our head. Therefore, we have suggested putting a bridging loan in place - in the unlikely event that our current chain falls through.

To accept this, the agent wants to see a letter from a bank by the end of this week confirming that an "open-ended" bridging loan is in place. Any ideas on bridging loans? Who to go with? What's the cost? How long to get them in place? The amount is £570K. Our current mortgage lender is Abbey.

Thanks

silvercar

Even though we have a chain in place that is ready to move, the agents acting on behalf of the sellers want us to exchange contracts on our current property before we exchange on the new property

I would be suspicious that they have a commission lined up somewhere in your chain. Or they hope you will buy a different property on their books if you don't get this one.

We don't like this - because we could end up without a roof over our head.

Totally agree, far too risky. And what's to stop them putting the price of your dream home up once they know you have nowhere else to go?

Therefore, we have suggested putting a bridging loan in place - in the unlikely event that our current chain falls through.

Good idea. With a bit of luck you will put it in place but not actually call on it.
Chances are probate will take longer to sort out than anything else in the chain.

To accept this, the agent wants to see a letter from a bank by the end of this week confirming that an "open-ended" bridging loan is in place.

Hmm. If you don't have a friendly bank manager, then a letter from a mortgage advisor should be acceptable (though check).

Who to go with?

Ask whoever you are arranging the new mortgage with, failing that consult a mortgage broker or your bank manager.

What's the cost?

As a general guide, 1% of the loan value.

How long to get them in place?

Allegedly as little as 24 hours. I'm sure you could have a letter saying one is being set up within 24 hours.