Buying advice

chillibum

Good evening. 
I've seen a property I'm desperate to get which is on the market for 250k 
My house Is getting ready to go on the market it's worth 275k and I've a balance of 50k.
I've been given the ok to port my balance across to the new property
Is a bridging loan best to secure the property until my house sells and I clear the debt or a totally new mortgage 
Thanks

eddddy

Bridging loans can be eye-wateringly expensive, and a bit risky

If you buy with a bridging loan, you might have to wait 6 months and pay high bridging loan interest until you can get a mortgage on the new house...

This led to the introduction of the 6 month mortgage rule whereby most mortgage lenders will now not permit borrowing against a property until the owner has been registered at Land Registry for 6 months.

Link: https://www.backhouse-solicitors.co.uk/backhouse-blog/6-month-mortgage-rule-homebuyers/

Or you might hit problems with the sale of your current house (e.g. buyers dropping out), meaning that you have to pay bridging loan interest and mortgage interest for even longer than 6 months.

Or worst case - you buy the new place, and the property market tumbles - so you have to sell your current house very cheaply - e.g. £225k - and you're strapped for cash.

K_S

chillibum said:

Good evening. 
I've seen a property I'm desperate to get which is on the market for 250k 
My house Is getting ready to go on the market it's worth 275k and I've a balance of 50k.
I've been given the ok to port my balance across to the new property
Is a bridging loan best to secure the property until my house sells and I clear the debt or a totally new mortgage 
Thanks

@chillibum You'll need some form of short term property finance to break the chain, it could be a regulated bridging loan (expensive but straightforward to take out) or similar kind of short term mortgage offered by a few building societies (less expensive but more criteria to meet).

The risks are as outlined by the poster above.

The 6 month waiting period is an issue for some lenders but there are a good number that don't mind and others that have an exception for paying off bridging loans. However, since you are porting, you'll need to check with your specific lender that they're happy with the plan.

london21

Would definitely not advice bridging loan.
They are like 0.5% per month.