Buying before selling - briging loan or mortgage or other?

CosmoKramer

Hi, looking for some advice regarding buying a new house before selling our current one. Our plan would be to buy a property before the end of the year and sell current property in spring next year.

Current property is owned outright/mortgage-free so I'm trying to figure out what our best option is for funding the new purchase. On the assumption that the sale of current property would cover the loaned amount for new property, would a 9month/1 year bridging loan be a better option than a short term mortgage (and associated early repayment fees)? Or is there an other option I'm missing?

Thanks for any help

IdrisJazz

We were in this position a few years ago. Existing property mortgage-free and looking to relocate quickly, we decided to buy before selling.

As a result, we needed a mortgage broker (I was self-employed), and we needed to do a 2 year fix at the longest term we could arrange (to age 69) to make the payments affordable. The plan was to then remortgage using the proceeds from the sale to reduce the amount owing.

We therefore didn't need a bridging loan, but took the risk of managing the cost of maintaining two properties and the risk of our old house not selling within 2 years.

It worked out out fine for us. 26 year mortgage became 17 years (2 yrs later) with debt halved, and lower repayments.

Interest rates now might make this less workable for you.

MWT

CosmoKramer said:

... would a 9month/1 year bridging loan be a better option than a short term mortgage (and associated early repayment fees)? Or is there an other option I'm missing?

Thanks for any help

Compare the interest rates on your various options, you don't have to take a fixed mortgage which is usually associated with early repayment fees, you can just take the variable rate or a tracker product which will not usually have any early redemption fees...

dwsjarcmcd

Bridging loans usually require the property to be for up for sale before you can apply for one.  

kandfs_mam

we were in the same position - we took out a mortgage on a tracker with no erc and just paid the repayments on it until we sold our house which was about 3 months. As soon as the proceeds of the sale hit our bank account we overpaid a massive amount off the mortgage. 

london21

Bridging loans are expensive and only a good for a short defined period if cannot be avoided.