Bridging Loan?

nap44

Hi

Just wondered if anyone can help??

We have fallen in love with a house on the market for £400k. There has been another "good offer" made by someone who is not in a chain. However, due to family probs the vendor hasn't accepted their offer yet.

We own our home outright £265k but as my husband is the only one working at the moment our income (£40k) won't stretch to a standard mortgage and I was wondering about going down the bridging loan route.

Any thoughts would be much appreciated.

Thanks

MortgagesInc

Do you have any savings of your own to put in to the purchase? The only thing to bear in mind is that with an 'open bridge', where you haven't exchanged on your exisiting, the interest rate and fees are quite expensive - so do you want to commit yourself to a rate of maybe 1% per month - £4k - without knowing that you've got a definite offer on your house?

toonfish

you're unlikely to be able to get a bridging loan until you have a buyer for your house.

Stuckupahill

I'm assuming you;re planning to sell your current home at some point?
Since you own your home outright you could just remortgage it and use that as the deposit....then take out a separate mortgage (based on the £40k earnings) to fund the remainder of the purchase....a mortgage advisor will be able to sort it out for you.
Obviously you'll be paying two mortgages while your home sells and that's the gamble......how long could that take??
but even paying two mortgages for a few months is a lot cheaper than a bridging loan....you're effectively not in a chain either so have as much bargaining power as your competitors.....
You could also rent it out while it's for sale to recoup some of your money and switch to interest only repayments on both mortgages while it sells.
Obviously this is a short-term solution and relies on you being able to sell your house fairly quickly - but also bear in mind you'll have a good 6-8 weeks to find a buyer for your house while the paperwork on your new one is going through.
I'm in similar position - at least I was until this week when we found a buyer for our house (the first people to see it!)...so it can be done - though i admit i was lucky to get a buyer so quickly (especially now!)
Good luck
Andy

PS meant to say - you need to make sure you pick mortgages which allow for (very) early redemption and huge overpayments too!