How do bridging loans work?

LillyJ

panichousebuyer wrote: »

I think some people do do this but we won't be. We wouldn't consider sending her to live with somebody else, like you say things could get very complicated and I think it is dangerous ground signing the rights of your child over to somebody else. Not for me I'm afraid!

Good I am glad to hear it! You even have to make the person the legal guardian if it is the grandparents (called informal fostering) and that is not something I would do to my children.

rach29

What I was trying to get at was are there other criteria by which the school "selects" pupils?

ie are they a specialist college?
a Church school?
Voluntary aided school etc

I'm trying to think of avenues for you to get a place for your daughter without necessarily being within catchment.

chickmug

panichousebuyer wrote: »

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!!!

But will any lender give you the bridging loan? I have my doubts in the current economic climate? You need to ask and then see if it is an option that you really have and if not there is no point in fretting whether it is the right thing to do.

Trollfever

As above.

In the current market I would be very suprised if you can actually find a lender to give you an "open" bridging loan.

If it goes wrong it is wipeout time.

panichousebuyer

rach29 wrote: »

What I was trying to get at was are there other criteria by which the school "selects" pupils?

ie are they a specialist college?
a Church school?
Voluntary aided school etc

I'm trying to think of avenues for you to get a place for your daughter without necessarily being within catchment.

Sorry misunderstood, school is neither of the above. Only way is catchment area.

panichousebuyer

Have decided that a bridging loan is definitely not the way to go and thinking of various other options.

We have just been to see the house in question and I love it, size is perfect and it feels very homely.

Can anybody tell me what they think about my latest solution!!!

The vendors told me that they want to be out in the summer holidays which would be absolutely perfect for us. They are in a no chain position and have already bought their house as they are relocating to Lincolnshire. Would it be possible for them to rent out the house to us until we have a buyer for ours and then we would pay them the current asking price (we do have about £70,000 equity in this even if there is a crash)!

Is this a feasable option, if done properly through a solicitors?

Doozergirl

It's not really advisable for the vendors to do it if they want to sell their house. If they don't mind letting it out OR selling it, then it won't make much difference to them.

You sign a 6 month AST and buy the house when you are ready to.

If they only want to sell the house and are expecting you to rent for two or three months, then their solicitor will advise against it. We're back into unquantifiables. When will you sell your house, and for them, will you sell it at all?

If they can afford it and they don't mind then it's a possibility.

You could rent any house in the catchment and rent yours out for a while. If you want to move back to your own house after a year or so, you give notice to your tenants and to your landlord. Kids in the right school and you still have a nice house. Job done.

panichousebuyer

If push came to shove I think we would have to rent in the catchment area until our daughter gets into the school even though the houses are really too small for six of us to share. Also with there being three children who will be starting secondary school every two years we would be living in rented accommodation for a very long time. Then not forgetting another younger son, staying in our current house is not possible.

We will do what you suggested though and put the house on the market for a low asking price in the hope that somebody will be interested? I think we will also approach the vendors about the renting possibility, at the end of the day they can only say no and we won't have lost anything.

PasturesNew

There never used to be any such rush to move to areas to get into schools.
You just went to the one closest and you bought a house where you wanted/could afford.
Schools weren't on the buying radar.

I guess those league tables have a lot to answer for.

Anyway ... I thought they were changing the allocation system to stop all this fannying around.

PasturesNew

panichousebuyer wrote: »

Can anybody tell me what they think about my latest solution!!!

The vendors .... want to be out in the summer holidays ... They are in a no chain position and have already bought their house ... Would it be possible for them to rent out the house to us until we have a buyer for ours and then we would pay them the current asking price

While it is possible, it might be unlikely that they would be interested in such a deal.

From their perspective, there is the consideration that they would have to have a Buy To Let mortgage on the property possibly and to then comply with legislation over renting it. They might wonder what happens if your house doesn't sell, or if in 6 months you receive a much lower offer and can't afford theirs. Although you know you've £70k equity they can't be assured of your honesty and integrity. Indeed, during the period of your renting your situation might change.

What if they rent it to you, miss the boat on selling it to a "real buyer", then the market falls and you pitch in a LOT lower than today's price?

What if there is a drastic and unexpected change to your circumstances and 4 months down the line you are not in a position to obtain the mortgage you need for the new house? This could be from a variety of causes like redundancy, illness, death or disability. What if one of the children is dianosed with something hideous and you have to give up work and incur extra expenses for hospital visits etc etc.

From the seller's perspective they have nothing to gain and everything to lose. Only you really win. And even you could lose if you don't get a buyer for your current house.

My advice in an unsure and falling market is to not come up with complex solutions to a problem. Either sell your house or walk away from the one you want. There will be others.

Good luck, whatever you decide.