Can I have a mortgage, or do I need a bridging loan? And why?

Custom24

Hi
I'm lucky enough to own my own house outright with no mortgage, and to have some savings as well.
I've found a house I'd like to buy, but my savings aren't enough, so obviously I'd have to sell my current house to make up the difference.
I don't want to get into a chain, because the seller of the house I'm interested in would obviously prefer someone without a chain, and for other reasons.

So, what are my options?

Here, I'm super-confused between a mortgage and a bridging loan, and why / if I'd need the latter.

I'd like to take out a mortgage and then pay it back after the initial deal period (say 2 years) is up.  By then, I'd have sold my current house and be able to pay off the mortgage.
However, I was in a similar situation a couple of years ago and I phoned a mortgage broker.  When I explained my intentions, they shut down the conversation and said "you need a bridging loan, and we cannot help you with that".
I didn't want a bridging loan (they are more expensive), but they were adamant that they could not continue the conversation, even after checking with their line manager, because to proceed with a mortgage application under these circumstances would be "dishonest".

I was left baffled.  After the initial deal period of a mortgage is up, you are always free to switch to a different mortgage provider, in which case the existing mortgage provider will be paid off in full.  Even within the initial deal period, you are free to pay off in full, but there is an early repayment charge.

So what is the difference with what I would like to do here?  Why would a mortgage provider not accept my application (if that is indeed the case)?  Why would they care about my intention here to pay the loan off in full at a future date, when either the early repayment charge will kick in, or it would be outside of the period for that anyway?

By the way, the mortgage application I would be making would be with a LTV of 45.5% based on my savings and the price of the house I am interested in, and not considering the value of my current house.

Thanks for any help here
Mark

MovingForwards

What would you be doing with your first home for the 2 years?

haras_n0sirrah

You wouldn't need a bridging loan as long as the mortgage goes on the house you will be living in after completion. You would just need a mortgage subject to the usual affordability checks 

Custom24

MovingForwards said:

What would you be doing with your first home for the 2 years?

Selling it.  It took more than one year to sell my previous house, albeit that was with me living in it, but there was no ongoing chain.  If it sold quicker than expected, I would look at the early repayment charge and see if I'd be better off paying off the mortgage at that stage, or if I'd be better off waiting until the end of the deal period.

Custom24

haras_n0sirrah said:

You wouldn't need a bridging loan as long as the mortgage goes on the house you will be living in after completion. You would just need a mortgage subject to the usual affordability checks 

Thanks, that's what I figured.  So I don't know why the mortgage broker got it so confused when I talked to them the last time.  They were a fairly large firm as well, so maybe they just didn't understand what I was trying to explain to them.  From what they were saying, I assumed if I did go ahead with an application, that something would come up in the mortgage application that I'd have to lie about in some way, or else the application would be declined.  But have never figured out what that was.

haras_n0sirrah

Speak to another broker.
Many independent advisors post here. We aren't allowed to approach forumites but most of us are happy to reply to pm's requesting help. Read the  boards and see who you feel gives good advice and send a pm.
There may be an option with no early repayment charge which would be more suitable - it all depends on your deposit, affordability and circumstances