Bridging Loan

MaryNB

yellowpollycat said:

Slithery said:

yellowpollycat said:

The house we are buying is empty, so we are going to exchange and then rent it until our sale goes through.

If you are purchasing with a residential mortgage then this won't be allowed. Also what makes you think that your tenants will want to leave their home when your sale does go through? You're looking at probably 2024 before you'll be able to legally evict them.

Sorry, I wasn't clear.  The house we are buying does not have a mortgage and that is the one we will exchange upon without a completion date and then rent and live in.  Our property will remain empty until the sale goes through.  

I'm not sure I've interpreted this right at all so correct/ignore me if I'm wrong.

You cannot sell your house before the SDLT relief ends so you want continue with your onward purchase. At his point you will own two properties and want to use a bridging loan to see you through until your sale completes. 

You mention exchanging on your onward purchase without a completion date. However, you need to complete, not exchange, by the end of September to avail of the SDLT relief (which you have mentioned in your opening post). It would be insane not to set a completion date or at least a long stop date at exchange (I thought it was impossible but a quick google tells me it's not "illegal" but is highly inadvisable).

Are you renting your onward purchase between exchange and completion? Is it your sellers that do not have a mortgage in place, and hence won't be subject to lending rules? If so it's still not a good idea for them to have people in the house without a formal arrangement and so you should have a tenancy agreement. In this scenario you are tenants in a house you have agreed to purchase but with no end date in sight. I don't know why the sellers would agree to it, its very messy. If they still live there and you are lodgers it's legally easier for them, but still don't know why they'd agreed to it.

Or do you intend to put tenants in the house you are purchasing, until you are ready to move in? And you don't need a mortgage for your onward purchase (therefore being able to let it without lender's permission).
Might work for a holiday type let (subject to local laws that is) but not for assured shorthold tenancies if you are completing on your sale in the next few months. An AST is minimum 6 months and after that the tenancy continues as a rolling contract. You'll have to follow a set of procedures to request that your tenants leave (it's essentially a request, not an eviction), and go to court if they don't want to. 

yellowpollycat

Hi, originally yes, but we've given up on completion by the end of September - I've just posted about the outstanding issue if you don't mind having a look.  We don't want to lose the purchase and they intend to rent it out if this sale doesn't go through anyway.  There will be a tenancy agreement drawn up by the Estate Agent.

MaryNB

yellowpollycat said:

Hi, originally yes, but we've given up on completion by the end of September - I've just posted about the outstanding issue if you don't mind having a look.  We don't want to lose the purchase and they intend to rent it out if this sale doesn't go through anyway.  There will be a tenancy agreement drawn up by the Estate Agent.

I'd be extremely surprised if your solicitor let you exchange without any idea of a completion date. What has your solicitor said about this? Also what happens if your sale falls through? The minimum AST length is 6 months so you could be on the hook for rent and bills for that length of time even if the sale falls through and you want to move back to your own house.