Bridging loan vs short-term mortgage vs ISA savings

sometimesconfused

I've found a house I like for £500k.  My current house is mortgage-free and worth £170k, it's not ready to sell but should be in 3-6 months.  I've £400k in easy-access savings and £100k in ISAs.

To buy the new house now I could either:

 - Use up all my savings and ISAs.  But that would leave me with no emergency fund until my current house sells and wipe out the advantage of tax-free ISA savings.

 - Take out £100k in finance (bridging loan or short-term mortgage - I'm really sure of the pros and cons of one vs the other), keep my ISAs in place, and pay off the finance when my current house sells.

Does anyone have advice or thoughts on which approach is best, pros and cons, risks, etc?

Many thanks.

Hoenir

Once you determine the cost of bridging finance. The decision may well be easy to make.  

Flugelhorn

don;t forget the stamp dut y+  3% extra stamp duty - that bill will be about 30K

BonaDea

Why is it not ready to sell, but might be in 3-6 months?  Is it because you're having work done or want to spruce it up so it can achieve the £170K?  If so it might be better to put it on the market now at price low enough to take account of its condition; the amount 'lost' from the £170K might be much less than the cost of a bridging loan, which will likely be tens of thousands, or the amount foregone by losing the long-term ISA benefits.

The bridging loan will give you less control, and carry a lot of risk.  You'd have more control and also less risk by choosing to sell soon but take a lower price.

Bluebell1000

With our cash ISA, you can replace whatever you take out as long as it's within the tax year, and have your ISA allowance on top. Maybe worth checking if yours offers the same? You would need to be confident of selling in the same tax year though, in order for it to be a possibility.

Bluebell1000

You could look at an offset mortgage, it may be cheaper than a standard short term mortgage, and I'm sure it would be less than a bridging loan.

sometimesconfused

Thanks everyone - some great ideas there, lots of me to research over the next couple of days.  It looks like a bridging loan of £100k for one year would incur around £10k of interest and fees.  So the idea quickly listing my home for sale at a lower price might be a favourite.