sale fallen through - is bridging loan my only option?

tudorfan22 · 19 April 2018 at 11:55AM

Can anyone help me? I am selling my house to fund a retirement home in Spain, the Spain house is so much cheaper than a house here on the south coast and im using equity in my UK house to fund Spain house. The rules of buying in Spain is that I put a 10% deposit down and promised to complete by a certain date. Things were going fine until my buyer pulled out at the last minute, meaning were having to go back to square 1 and remarket our property. Even with the nest will in the world we may not complete by the contract end date, jeopardising my house in Spain and my deposit. My only thought is the dreaded bridging loan! Form an online calculator it seems that an £85k loan would cost me approx £3500 for 6 months.
Obvs I wouldn’t consider this route until it was absolutely the only option but I have some questions and would obvs appreciate some advice, people on the board quite rightly advise to avoid with a 10 foot pole, but has anyone had a bridging loan that whilst expensive, saved their bacon?
My questions are:
How likely am I to even get a bridging loan? – im scared I wont get approved, but my LTV on my UK house is 35%
How long do they take to arrange?
Are there any hoops I have to jump through e.g. to a need a valuation on my property etc?

pinklady21 · 19 April 2018 at 12:44PM

Why not remortgage your house in the UK and increase the loan by enough to fund the purchase in Spain? Assuming you meet the lender's criteria for the new loan. You could then pay off the mortgage when the house in the UK finally sells. Might be wise to consult a mortgage broker.

tudorfan22 · 19 April 2018 at 1:10PM

id like to do that, im not sure how successful id be. my broker said that she suspects it is not something that would normal be possible as my plans are to leave the UK and sell the property asap. she said most lenders would not lend on this basis

glennevis · 19 April 2018 at 1:29PM

Quote "has anyone had a bridging loan that whilst expensive, saved their bacon"

My parents did over 40 years ago. It wasn't about the cost. They had to move to a bungalow due to a disabled family member and it was the only way to ensure purchase of what was (still is) a rarely available property.
My mum still lives there.

Ask yourself, in the grand scheme of things is £3500 a lot of money if it enables you to move on with your life.

saajan_12 · 19 April 2018 at 1:45PM

tudorfan22 wrote: »

Can anyone help me? I am selling my house to fund a retirement home in Spain, the Spain house is so much cheaper than a house here on the south coast and im using equity in my UK house to fund Spain house. - so you'll end up with no mortgage? Nice! The rules of buying in Spain is that I put a 10% deposit down and promised to complete by a certain date. - so the point when you put the 10% deposit & promise to complete sounds like what we call exchange. Things were going fine until my buyer pulled out at the last minute, meaning were having to go back to square 1 and remarket our property. - why didn't you tie the transactions together by exchanging on UK property on the same date you "promise to complete" in Span, with matching completion dates? That woudl have avoided this. Even with the nest will in the world we may not complete by the contract end date, jeopardising my house in Spain and my deposit. - Can you lower the price of your UK home to achieve a quick sale? Can you remortgage your UK home to release some equity, and then rent to pay the mortgage or pay off when you sell? My only thought is the dreaded bridging loan! Form an online calculator it seems that an £85k loan would cost me approx £3500 for 6 months. - in the grand scheme of buying / selling costs, moving, solicitors, surveys, taxes, etc this isn't massive. The issue is more that you're taking the risk that the UK home doesn't sell within 6 months.. it gets expensive to Keep funding.
Obvs I wouldn!!!8217;t consider this route until it was absolutely the only option but I have some questions and would obvs appreciate some advice, people on the board quite rightly advise to avoid with a 10 foot pole, but has anyone had a bridging loan that whilst expensive, saved their bacon?
My questions are:
How likely am I to even get a bridging loan? !!!8211; im scared I wont get approved, but my LTV on my UK house is 35% - for an unsecured bridging loan the LTV is irrelevant, only your total debt relative to income / affordability. Likely to get approved - depends on your overall income / affordability. Speak to a broker. However with a low LTV you may be able to remortgage your UK home upto 75% LTV with a lower interest rate than an unsecured bridging loan.
How long do they take to arrange?- No idea, speak to a broker.
Are there any hoops I have to jump through e.g. to a need a valuation on my property etc?- No for an unsecured loan. Yes for a remortgage (but on the flip side the rate should be cheaper)

I'd look into the remortgage route given your low LTV - it'll be a much cheaper rate than an unsecured loan so you're not so worried about how long it takes to sell. When are you planning on leaving your UK home?
* If you're still there for some time, you may be able ot get a residential mortgage
* If not, can you get a BTL and rent out the property short term?

tudorfan22 · 19 April 2018 at 2:10PM

thanks all for info, I would prefer to remortgage and use the equity in my house to pay for the spain house, im just super crestfallen at the mo, and as my broker has put into my head that its a probable no, im at present a little hesitant to go through the process on the phone to get a remortgage only to get a rejection. im a little emotionally fragile at the moment! lol!
I know if I were my usual self id apply through my current lender and then set to work on the whole of market for mortgages, but seeing as im not going to have an income when I leave UK they may not want to deal with me!
im also concerned that being scrupulously honest during the application will raise red flags as im not going to have a future income and in their eyes I could default on the mortgage - unless I don't mention that I am selling my current home, that im only looking to finance a holiday home?

tudorfan22 · 19 April 2018 at 2:30PM

just trying to find online if anyone ever has been turned down for a bridging loan? I cant see that any reasonable application ever gets turned down? and im not looking at brokers websites, impartial websites seem to suggest that providing I have an 'exit strategy' then there is very little chance of being denied? or am I only seeing what I want to see!

pinklady21 · 19 April 2018 at 7:30PM

Save yourself the stress. Find a broker who can help you - they will manage the application process, and only apply to lenders who they believe are likely to lend to you.

DogBowl · 21 April 2018 at 3:39PM

I sympathise, our chain has collapsed and I too wonder what the options are for a house we would love to buy.

Have you considered renting present home to pay off a mortgage advance then give tennants notice when a buyer comes along? Not sure of the practicalities but that way the rental income should at least match the mortgage. You need advice obviously but it may be cheaper than bridging loans?

[Deleted User] · 21 April 2018 at 4:14PM

Just add extra stress to the situation. Becoming a LL isn't easy, lots of things to learn to do that. Not worth it for a short term arrangement.

tudorfan22 · 23 April 2018 at 1:25PM

TBH a bridging loan isn't as expensive as I first thought and in order to preserve my sanity and my future hopes and dreams I may go for it. fees for an £85k loan seem to be about £4k with interest at 0.49-0.9% a month. its not cheap but neither is losing my deposit and house!

PLEASE READ BEFORE POSTING

sale fallen through - is bridging loan my only option?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free