How do bridging loans work?

panichousebuyer

We are in a situation were we would like to buy a house in a particular area for our daughter's secondary school. We have to be living in the area by September, which does not give us a lot of time and therefore we will probably not have sold our current home enabling us to do this and are thinking about the various options available to us.

Please could anyone inform us on how bridging loans actually work.

For example a house that we have seen is valued at £200,000 (the home that we are in now is worth approximately £215,000 with a £125,000 mortgage on it).

Do we have to have a loan for the amount of £200,000 to buy the new house outright and then payback approximately 1-1.5% of that each month then settle when our current house is sold or do we borrow say £25,000 and use that money to continue paying our existing mortgage, until the house sells, whilst also paying a mortgage on the second property!

Please help!!!

PasturesNew

Why not rent one in the right area, until yours is sold.
It'd be cheaper than a bridging loan.
And you can rent something really small and cheap - and just not actually live in it.
Then, you've got the address in the right area yet aren't paying out high bridging loan costs for god knows how long and trying to own/maintain/insure two homes, with all the stress.

Especially if yours doesn't sell as quickly as you want.

To reiterate, I am not proposing you rent a house in the area to live in, but simply to obtain your place on the school list.

panichousebuyer

That is another option we have looked at, the problem is, there are very few rental properties in the area and also because the of the way the school catchment/number of school places is at the moment you have to be very careful if you rent a property but don't actually live there. If the education board finds out you are doing this then they will not even consider your application you will be sent to any school.

Also in this particular area there are only a handful of larger properties (of which one is now up for sale) and as we are a family of 6 need the extra space.

There are so many things to consider and it is knowing what to do for the best!

LillyJ

It was in the news last week that LEAs were spying on families to make sure where they were living full time in the address they had given.
To be honest if it was that easy, surely loads of people would just rent a tiny cheap house in the catchment area; would be cheaper than private schooling?

pickles110564

Bridging loan should be the last thing that you consider at the moment otherwise if the market does crash then you could be in a hellva dire situation with no way out.
If the school is that bad use some of your money for private tutors,could save you a shed load of cash and you could stay in your home.

LillyJ

pickles110564 wrote: »

Bridging loan should be the last thing that you consider at the moment otherwise if the market does crash then you could be in a hellva dire situation with no way out.
If the school is that bad use some of your money for private tutors,could save you a shed load of cash and you could stay in your home.

Bad schools don't tend to be something private tutors can fix. I can understand trying to get your child in to the best school possible, and compared to private schools, moving house is very cheap! (some private schools charge £25k a year, even cheaper ones cost about £10k!)

panichousebuyer

My situation is that we have four children aged 10, 8, 6 and 1. The eldest three all go to the same primary school (which is not in our catchment school). Our eldest daughter is due to start secondary school next year and the school forms have to be in in October of this year.

We are in a dilema as unless we move house (before October) we cannot ensure that my youngest child will go to the same primary school as his brother and sister and that they will not be split between separate secondary schools.

panichousebuyer

Private tutors would not rectify the problem as the catchment school is no better or worse than the one we want her to attend. The reason we want her to go to this particular school is that we want our children to be able to walk to and from school and also as she is a very quiet, shy and nervous girl, we want her to be able to be with her friends. If she attends the catchment school she will have to go on a bus to school and with nobody that she knows.

The primary school she does attend is excellent, however and we want all our children to have the same standard of primary education.

Doozergirl

I'd be more inclined to put your house on the market at a really good price and grab one of the buyers that are out there that way. It's not likely to sell for more money because you've left it on the market for longer! And in that time you've spent goodness knows how much on repayments.

The problem is that not only is the price you sell for relatively unquantifiable, so is the length of time you have to cover two mortgages.

I would rather aim for a quickish sale than the associated stress of having to fund two houses.

If you think it's worth £215,000, stick it on at £199,950 and barter really hard on the house you want to buy. If people think your house is worth more than you are asking, they will end up paying it.

panichousebuyer

Is anyone able to post me an example of how a bridging loan works!!!!!!!

It would help us at least make an informed choice.

Thank you!

wymondham

panichousebuyer wrote: »

Is anyone able to post me an example of how a bridging loan works!!!!!!!

It would help us at least make an informed choice.

Thank you!

people in the know are steering you away from a bridging loan for a good reason.... listen to the advice.