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Bridge the gap on £1m home, quickly.

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Bridge the gap on £1m home, quickly.

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I've found a very clichéd 'perfect house' that is on the market for just less than £1m. This type of house comes up for sale very rarely in the area I'm looking, and I've been looking for a few years. We have £238k of equity in our current house (valued at £560k in 2018), and £200k in savings. The EA of the house we are looking to buy said he is only arranging viewings for people who are in a position to proceed immediately, of which there are several. Additionally, he said he expects to start receiving offers this week, which for us means that to stand any chance of buying it we also need to be in a position to proceed immediately.
The problem is that our house isn't on the market and right now and I don't earn enough to get an additional mortgage to cover the new house purchase at the same time as having a mortgage on our current house. A joint mortgage with my wife would ordinarily cover it as she normally earns a lot, but she quit her job to have another kid and won't start her new job for a couple of months. Having said that, we could comfortably afford a £600k mortgage based on my salary alone, assuming our current house had been sold. I've had a look at bridging loans, but they don't seem to offer more than the equity we hold in our current house and maybe I'm not looking at the right ones. I'm finding it difficult to see how we can get from our current position into owning this dream house.
Our current house is in a very desirable location and would be snapped up very quickly, but even a fast completion wouldn't be fast enough to allow me to get the ducks in a row and buy our new house.
How can we rapidly bridge the gap in order to make an offer on the new house - with valid financial backing - before selling our current home?

Replies

  • csgohan4csgohan4 Forumite
    8K posts
    Fifth Anniversary 1,000 Posts Name Dropper Photogenic
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    bridging loans are very expensive and a last resort. 

    As a vendor with no offer on your house, you are not proceed-able and therefore your offer will not be taken seriously.

    If your unable to get a mortgage at this present for the amount needed, you may have to wait until your wife gets a job, being able to afford the mortgage at current rates and passing affordability stress tests are different, they can easily add +5% to current interest rates. 
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ PIxie RIP
  • VestraunVestraun Forumite
    116 posts
    100 Posts Name Dropper
    A bridging loan in today’s world seems like insanity. What’s your plan b if your home doesn’t sell as quick or for as much as you are thinking? 
  • maximoose94maximoose94 Forumite
    36 posts
    10 Posts
    It's not about whether you can afford the mortgage at the current rates, it's down to the affordability criteria. Most of these max out at 4.75x your salary. If this isn't enough to cover the mortgage able amount then it's usually a no go. 
  • tobysnookertobysnooker Forumite
    3 posts
    First Post
    Our current mortgage provider confirmed we could go up to 600k on a mortgage based on my salary, excluding bonus (apparently they are not including bonuses any more). So that 600k mortgage, plus cash, plus equity in our current house is sufficient to purchase the new house. We have no loans or credit of any form apart from our mortgage so could sustain a rise to 7% for that mortgage before we had to make any adjustments to our lifestyle, based only on my salary. In fact when we got our first mortgage 5 years ago it was initially higher than this 600k mortgage would be at 7%, so perfectly manageable.
    The vendor is the CofE and we do have ties to them, so I'm wondering if an explanatory cover letter accompanied with an offer conditional on selling our house might persuade them to go with us rather than (e.g.) a property developer who is willing to pay cash.
  • edited 2 June at 2:09PM
    NatalieAGCNatalieAGC Forumite
    104 posts
    100 Posts Name Dropper
    edited 2 June at 2:09PM
    I’m no expert and don’t know criteria’s but buy to let loans with 20/25% deposit may work? Criteria usually is home owner and 25k salary min but I’m not a broker so not sure if that would work, you already have most of the deposit needed. May be worth speaking to broker?
     But then you would need to rent it out but least you secured it til your in position to sell yours and change the BTL to residential in time?  I don’t know the ins and outs sorry 
  • tobysnookertobysnooker Forumite
    3 posts
    First Post
    Thank you! That BTL idea is a really interesting one. I have a valuation on our current house booked in for today, to help inform equity held in the house at present.
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