Need a little advice on buying with a family bridging loan

intmilkbrilliant

I've put my house (no mortgage, worth roughly £100k) on the market and have been looking for a new one. The idea was I'd sell and get a new, smallish mortgage on the one I'd buy.

Not had an acceptable offer yet, but a property has come up I really like that I'd like to move on. I have an agreement in principle from HSBC for around £100k, but I need another £50k. My parents have said they'd be willing to give me a loan of the £50k until my own house sells so I can pay them back. Ideally, I'd like to take the full mortgage offer, sell my own house, pay my parents back and then pay down the mortgage to the originally envisaged level.

First, am I likely to run into problems with the lender or the tax man doing this? My parents would be happy to sign something to the effect that the loan is not secured on the house.

Secondly, can anyone recommend a good mortgage or lender for what I want to do? For previous mortgages I've been with HSBC (and the old agreement in principle is with them) but they seem to limit overpayments to 10% annually, meaning I couldn't pay off half when my sale went through. I'd like to go fixed in an ideal world, but think I probably need the flexibility of a tracker or SVR until I can get my money out of my current house. I'd also like to avoid paying a lot of arrangement fees if it's only going to be short term.

Thanks

Thrugelmir

intmilkbrilliant wrote: »

My parents would be happy to sign something to the effect that the loan is not secured on the house.

Your parents wouldn't be able to secure a second charge without the lenders permission. That's if the lender accepted a loan as the source of the deposit, rather than an outright gift.

davidmcn

Lenders generally expect the balance of the purchase price to be coming from your own funds rather than another loan, irrespective of whether it's secured on the property.

You also have to consider the affordability of owning two properties at once and having two lots of household expenses for an indefinite period of time.

Can't see any "problems with the tax man", though you would initially have to pay the additional rate of SDLT for your purchase and reclaim when you sold the first house.

getmore4less

Finding a lender that will provide a 67% mortgage when ALL the 33% deposit is a loan will be your first problem.

Zackisback878

intmilkbrilliant wrote: »

I've put my house (no mortgage, worth roughly £100k) on the market and have been looking for a new one. The idea was I'd sell and get a new, smallish mortgage on the one I'd buy.

Not had an acceptable offer yet, but a property has come up I really like that I'd like to move on. I have an agreement in principle from HSBC for around £100k, but I need another £50k. My parents have said they'd be willing to give me a loan of the £50k until my own house sells so I can pay them back. Ideally, I'd like to take the full mortgage offer, sell my own house, pay my parents back and then pay down the mortgage to the originally envisaged level.

First, am I likely to run into problems with the lender or the tax man doing this? My parents would be happy to sign something to the effect that the loan is not secured on the house.

Secondly, can anyone recommend a good mortgage or lender for what I want to do? For previous mortgages I've been with HSBC (and the old agreement in principle is with them) but they seem to limit overpayments to 10% annually, meaning I couldn't pay off half when my sale went through. I'd like to go fixed in an ideal world, but think I probably need the flexibility of a tracker or SVR until I can get my money out of my current house. I'd also like to avoid paying a lot of arrangement fees if it's only going to be short term.

Thanks

Hi, we've just done something similar and as i had a mortgage to port from my current unsold home we stuck with Satander. The additional aspect of our mortgage is tracker to allow for the overpayment

Santander did take into account a running fee for the 'retained property' which was factored into our affordability but the figure was very reasonable

My partners dad gifted us the deposit until our house sells, Santander are aware but didnt ask for any additional paperwork. Just our solicitor who needed written proof it was a gift and no interest in the new property