Mortgage or Bridging Loan?

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Mrsmch349
Mrsmch349 Posts: 33 Forumite
in Mortgages & endowments
Hi folks

We have just received an offer on our home ... it wasn't for sale ... it's an offer that we can't turn down, even though it forces us into moving a year or so earlier than planned.

We will complete on 1 Dec and had planned to go into rented accommodation for 6mths but ... we have found our dream property!! The trouble is that we can't afford it until May, when my husband retires and gets his lump sum.

I phoned our bank last night and they agreed a mortgage of £60,000 over 10yrs. I asked if we could pay it off in May and the guy said no but we could pay off lump sums as long as we don't clear it completely.

So, my questions are: should we get a bridging loan instead of a mortgage? Is it illegal to do what we're planning? They don't know that my husband will retire next year, at 55. If we take the mortgage, what's the minimum we can leave on the account e.g. Can we leave £100 on it and make a tiny monthly payment?

Thanks for your help.

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  • ACG
    ACG Posts: 23,727 Forumite
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    What you have been told is not quite correct. You can clear the Mortgage, but you would have to pay early repayment charges.

    There are lenders with products which have no ERCs, there are also offset Mortgages. But I think if you are planning on retiring in less than 12 months then its unlikely this would be an option and a Bridging loan would be the right route.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Mrsmch349
    Mrsmch349 Posts: 33 Forumite
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    Thanks for the response.

    Where's the best place to source a bridging loan?

    Am I not able to pay off most of the mortgage, and just have a tiny monthly payment?
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    That would depend on your mortgage. There might well not be an ERC, look at the Ts&Cs.

    Find a mortgage that doesnt have an ERC since that will be cheaper than a bridging loan.
  • ACG
    ACG Posts: 23,727 Forumite
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    I am pretty sure bridging loans are predominantly done through brokers.
    In terms of the mortgage and clearing all but some, yes usually you can do that. But you would be applying for a Mortgage over a period knowing you will not be working for that period - that falls in to the realms of mortgage fraud. If your pension(s) are enough to support the mortgage post retirement, that would be fine.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Mrsmch349
    Mrsmch349 Posts: 33 Forumite
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    Yes, the pension is excellent and we would be able to manage the payments even if we didn't have the lump sum.

    Thanks for the replies, everyone! :T
  • silvercar
    silvercar Posts: 46,960 Ambassador
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    ACG wrote: »
    I am pretty sure bridging loans are predominantly done through brokers.
    In terms of the mortgage and clearing all but some, yes usually you can do that. But you would be applying for a Mortgage over a period knowing you will not be working for that period - that falls in to the realms of mortgage fraud. If your pension(s) are enough to support the mortgage post retirement, that would be fine.

    Seriously? Mortgage fraud if you apply for a mortgage knowing you won't be working for the that period, it is fraud???

    So when I took a mortgage at 28, planning on stopping work at some point to have kids, it was fraud?

    and when I took a mortgage at 42 on a 23 year term, but intending to retire earlier than 65, that was fraud??
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    I would not ask/tell them you want to pay it off early or if you go offset go 100% quickly

    at least one case on here recently where an application was all going well then got withdrawn after they asked.

    There will be plenty of products available that will have lower costs than a bridging loan.

    It will be case of weighing up the fees/rates with the predicted cashflow.

    start with
    I phoned our bank last night and they agreed a mortgage of £60,000 over 10yrs. I asked if we could pay it off in May and the guy said no but we could pay off lump sums as long as we don't clear it completely.

    which bank and what deal was offered, rate fees and fix period.

    from that some ideas can be thrown into the pot.
  • ACG
    ACG Posts: 23,727 Forumite
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    silvercar wrote: »
    Seriously? Mortgage fraud if you apply for a mortgage knowing you won't be working for the that period, it is fraud???

    So when I took a mortgage at 28, planning on stopping work at some point to have kids, it was fraud?

    and when I took a mortgage at 42 on a 23 year term, but intending to retire earlier than 65, that was fraud??
    If you were asked about whether your future plans which would affect your income or expenditure then quite possibly yes.

    Type Mortgage Fraud into google...
    Mortgage fraud is a crime in which the intent is to materially misrepresent or omit information on a mortgage loan application in order to obtain a loan or to obtain a larger loan than could have been obtained had the lender or borrower known the truth.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • ACG
    ACG Posts: 23,727 Forumite
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    Mrsmch349 wrote: »
    Yes, the pension is excellent and we would be able to manage the payments even if we didn't have the lump sum.

    Thanks for the replies, everyone! :T

    In that case, a 10 year term with no ERCs should be possible.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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