House purchase with personal loan

radoslaff

I am about to have an offer accepted for a house in Scotland. I put it on the condition that it will be a cash purchase and a quick one. I have a house in England that I will sell eventually but time is of the essence. Is it legal to take a personal loan to buy the house? Will the solicitors be satisfied with my source of funding?

Bookworm105

personal loan secured against what and borrowed from whom? 

do you in fact mean what is more often called a bridging loan?
What Are Bridging Loans and How Do They Work | Experian

Compare Bridging Loans | MoneySuperMarket

teaselMay

When I just out of curiosity looked at the small print of the personal loan being offered as routine it seemed by my bank one of the few things that it couldn't be used for was property purchase

user1977

Bookworm105 said:

personal loan secured against what?

I presume by "personal loan" they mean an unsecured one.

Yes, it's legal, and your solicitor shouldn't have a problem with it (assuming it's a reputable lender and not Barry the Loanshark handing you a fistful of tenners).

But the bank is likely to ask you what the loan is for - up to them whether using them as a bridging loan for a house purchase is acceptable.

Debbie9009

I assume you mean a mortgage, in which case yes it’s legal, although how well that will go down with the seller as you have told them it will be a cash purchase remains to be seen, don’t be surprised if they get cross about this.

if you mean a loan not secured on the house, unlikely you will get one as when you tell the loan company you want to use the loan to buy a house they either will not want to loan for that or will want to secure it on the property, just like a mortgage, also you may not be able to get a large enough loan.  Have you contacted any loan companies to see what they would be prepared to loan to you ?  If not I would do so quickly, as you may need to change your offer to allow for getting a mortgage or\and selling your house.

Bookworm105

user1977 said:

Bookworm105 said:

personal loan secured against what?

I presume by "personal loan" they mean an unsecured one.

good luck with getting an unsecured loan for enough money with which to buy a house... even if it is only for a short period to bridge the gap between purchase of new and sale of old house 

user1977

Bookworm105 said:

user1977 said:

Bookworm105 said:

personal loan secured against what?

I presume by "personal loan" they mean an unsecured one.

good luck with getting an unsecured loan for enough money with which to buy a house... even if it is only for a short period to bridge the gap between purchase of new and sale of old house 

Yes if we were talking about the whole price, but it could just be a relatively small shortfall to cover.

Bigphil1474

OP, why don't you re-mortgage your house in England and use the funds towards the house in Scotland. You pay that off when you sell the house in England. Depending how much you need, there will likely be an early repayment charge, but it'll possibly be cheaper than a personal loan anyway. I don't know the stamp duty rules in Scotland (or whatever the equivalent is there), but if both houses were in England, you would pay stamp duty on the full purchase price of the second house but could claim some of it back once your existing property is sold if within 3 years.

eddddy

radoslaff said:

I am about to have an offer accepted for a house in Scotland. I put it on the condition that it will be a cash purchase and a quick one. I have a house in England that I will sell eventually but time is of the essence. Is it legal to take a personal loan to buy the house? Will the solicitors be satisfied with my source of funding?

It's legal and shouldn't be a problem for the solicitors - whatever type of loan you choose.


But maybe it's worth mentioning that a few people have got into big difficulties with this approach...

For example,

• Your house in England might take a lot longer to sell than you expect, and/or it may end up selling for a lot less than you expect.

• In the past, what has hit people doing this really hard is a slump in house prices. i.e. You've bought in Scotland when house prices are at their peak, but you then have to sell the house in England in the middle of a slump.

• The survey and/or searches on your house in England uncover problems, which delays or prevents the sale. e.g. a rotten roof joist needs a chunk of cash for repairs. Or a worst case scenario might be that a survey identifies some possible subsidence - which might take 1 or 2 years of monitoring before repairs can be done.

But if you can afford to keep paying interest on the loan for a while and/or your happy to take the risk, there's probably nothing else stopping you.

blueskies1985

So you lied to get your offer accepted. 

Hate to be the bearer of bad news but if the estate agent do the correct financial checks the solicitors won’t even get a chance to do their own. The estate agent will have to tell the sellers the truth and because you’re a liar, they’ll lose trust and go with another buyer.