Bridging loan to help parents move in Scotlans

lifeofbry

I was wondering if anyone can help. My parents are looking to move to a bungalow as they’re getting on a bit. The house that they will buy will inevitably cost more than the one they’re in.

As they’re in their 70s/80s, the ideal situation is they buy the new one first, sell theirs, gradually move into the new one, before new owners take their current home.

In order to do this, they’d need a bridging loan of c£100k. I have this money in my ISA and my current properties have over £300k equity. Might I be able to act as guarantor on a bridging loan? Or take one out for them?

lifeofbry

P.s. I’d rather not take the cash out my ISA

ethank

Bridging loans are generally more expensive than a mortgage. Is there anyway you can persuade them to sell first?

davidmcn

How much of an overlap are they thinking about? i.e. are we talking about them buying and selling at roughly the same time with a known overlap of say a couple of weeks ("closed bridging"), or buying before they have any idea when their house will sell or for how much ("open bridging")? The latter is obviously riskier and more expensive.

Have they taken the Additional Dwelling Supplement for LBTT into account?

lifeofbry wrote: »

P.s. I’d rather not take the cash out my ISA

Fair enough, but how much fees and interest do you (or your parents) want to pay to borrow it elsewhere? It may well still work out cheaper to use your cash.

lifeofbry

It’s likely that it will be a month or so overlap, with their current property going on the market as soon as they’ve had an offer accepted . The reason being because of their age, I’d rather we weren’t in an exchange of both properties on the same day.

I believe if their property is sold within 18months or buying the new one, then any LBTT supplement can be refunded.

I don’t ideally want to touch my ISA as I’ll lose the compound impact of the investments to date.

I guess my base question is whether I can act as a guarantor on a bridging loan for my parents (noting that there will be additional costs)

eamon

How about a different plan?



Sell & buy the houses almost simultaneously. If your parents need a short period of time to exhange/complete on the bungalow then put all their stuff in storage (not that expensive) and send them on holiday for the duration.

onwards&upwards

Can I ask why their age precludes a standard simultaneous sale/purchase?

Hiring a premium moving company who will pack up the old house and unpack everything at the new house including assembling furniture, emptying boxes, stocking cupboards etc will be a lot cheaper than a bridging loan.

xylophone

The reason being because of their age, I’d rather we weren’t in an exchange of both properties on the same day.

I don't quite see the relevance of their age to this.

And why on earth would they wish to go through the faff of bridging loans, extra SDLT etc?

Why not use the standard process but with you as move manager, assuming that you can take a week or two off work to assist?

baldelectrician

The new letting agreements have a minimum 28 day period, your parents could move in to a small flat for a short time between houses.

ethank

You've not given a reason for this other than their age. I don't want to generalise, but older people often have attachment issues to properties and possessions or have hoarded items over a number of years and find it difficult to let go.

I helped my parents to move at over 70 each a few years ago. The move resembled the above. I think the best way was to actually just push them through it. If you let them sort everything out in the future, then they never do it.

Yes it was difficult and they did not want to part with some things, but difficult conversations were had with them and they got through it.

There were somethings they they considered heirlooms (but I remember them getting it with tiger tokens from an Esso garage) and clothes they had not worn in thirty years. In the end they both realised we were trying to help them and were very thankful!

Joyful

I am just about to put my house on the market. The estate agent said her last client had to pay a fee of £12000 to get the bridging loan so she never suggests this to anyone.