Remortgage or bridging loan

Chattykathyblueblue

We are looking to buying a more expensive property and want to be ready to go when the perfect propery comes on the market, we don't want to put our house on the market first. We are currently mortgage free with a good pension pot, annual pensions and S&S ISAs. The value of our currently property and the ISAs would cover the amount of what we want to spend on the new house. What is the best/cheapest  way to go about this? Do we remortgage our current house and have the money in the bank so to speak and then just add our ISAs? We'd then repay the mortgage once we'd sold our current house or do we go for a bridging loan? TIA

lonibra

Why can't you find a new property and then just apply for a mortgage to buy it after you have an offer accepted? That would be the more straightforward way of doing this.

Chattykathyblueblue

lonibra said:

Why can't you find a new property and then just apply for a mortgage to buy it after you have an offer accepted? That would be the more straightforward way of doing this.

It's mostly because we aren't 'earners' anymore, would we get a mortgage? We currently receive about £30k a year in pensions - all the rest is either in our house, the pension pot (which we don't want to touch) and the ISAs which we don't mind spending.

[Deleted User]

What numbers are you trying to raise? 

Chattykathyblueblue

Sorry, I've realised I didn't mention that we are retired in my original post!!

Chattykathyblueblue

Deleted_User said:

What numbers are you trying to raise? 

We're looking at spending £600k - £400K is the value of our current home and we could use £200k of ISAs

K_S

@chattykathyblueblue A conventional mortgage is unlikely to be able to bridge the 400k gap. With a 30k pension income, you're probably maxing out at 135-140k loan size.

A bridging loan may be an (expensive) option, either secured solely on the new property or (for a slightly lower rate), secured on both properties.

Chattykathyblueblue

Thank you for your reply, would remortgaging our current property not be a good idea either?

K_S

@Chattykathyblueblue Assuming I'm not misunderstanding you, even if remortgaging your currently unencumbered property to release cash, that would still be based on your 30k pension income so again maxing out at 135-140k at most.

Just to be clear I'm only talking about relatively mainstream options, there might be other retirement mortgage options like RIO etc as well to achieve your objectives.

Chattykathyblueblue

Thank you for taking the trouble to reply again - I had presumed the house would be used as collateral but it's obvious our income wouldn't be enough to mortgage the house. You can probably tell I've not done this kind of thing before

Can I just ask - what is RIO?

amnblog

Kathy

The smart thing is to set up your sale to complete on the same day as your purchase.

Forget trying to mortgage your current home.

You could get a bridging loan but since it may cost up to 10% of your purchase price, it is not a smart idea.