House sale/Bridging Loan advice please?

Sharra

I'm asking this for my mum as she doesn't have internet access.
Their house is on the market but they have been let down by buyers, they had already had an offer accepted on the house they really really want.
Does anyone have any advice on whether they should a) get a bridging loan so they can still buy b) go to auction with their house c) get some sort of extra mortgage or d) some other option?
Any advice greatly appreciated.
Thanks
Sharra

theGrinch

there are several options. auctions being one while you are almost guaranteed a sale you may need to drop your price and wait 2 months (1 month for the nxt auction and 28 days to complete).

bridging loans are possible but they tend to be relatively expensive. 1% arrangement fee and 1.25% pcm. maybe your parents should speak to their bank in first instance.

you could try a firm that buys houses at "trade prices" but they will expect a significant discount.

my fav...depending on how much cash they have available for the new house what about converting current mortgage into a buy to let one and the new place into the main residence one (or you could do it the other way around). while buy to let may not be an end it could give you breathing space to find a buyer. try a posting in the mortgages forum on here.

let us know how you get on.

hazeyj

If your mum doesnt have have a mortgage already then a bridging loan or credit card with 6 months no interest should be ok. If she already has a mortage then you have to be careful about borrowing extra money as mortgage companies do a final credit check before they release funds so any new borrowings may stop them releasing the mortgage. Our mortgage advisor told us this.

hazeyj

Buy to let mortgages are taking approx 3 months to convert/arrange at this current time. We have been waiting 4 months on ours

GDB2222

My feeling is that this is not a good time to have an extra house. The costs of a bridging loan are quite frightening, so your parents could eventually get stampeded into selling for a song, just to stop the monthly outgo on the loan. The same applies to an increased mortgage, although the interest rate will be lower. I can't see any point in going down the route of BTL, as your parents want a home, not an investment.

Bear in mind that houses are not selling quickly at the moment, and prices are not going up (and might collapse).

Auction might be a good idea, but there is a snag. The auction is binding on them, but not all houses sell at auction, about 70% to 80% or so is usual. So, do your parents sign up to buy the other place before the auction? If they do, they run a 20% to 30% chance their house does not sell, and they end up with 2 properties. If they wait until after the auction to sign up for the new place, the vendors of the new house might change their minds, and your parents could be homeless.

Undoubtedly the safest bet is to let the new house go. There are plenty more out there.

theGrinch

I waited 4 weeks for my BTL loan. survey was done within 3 days.

Sharra

Thanks to everyone
It looks like there's a possible new buyer but they have decided to be sensible and lose the new house rather than take on additional debt if they don't get a sale in time.

tightgit_2

I have been reading this thread with interest. Can someone tell me what difference it would make having a buy to let mortgage ?