We have a chain in place to sell our house and move to buy another property. This new property is going through probate. However, the property we want to buy is in hot demand and is being chased by a number of potential buyers.
Even though we have a chain in place that is ready to move, the agents acting on behalf of the sellers want us to exchange contracts on our current property before we exchange on the new property. We don't like this - because we could end up without a roof over our head. Therefore, we have suggested putting a bridging loan in place - in the unlikely event that our current chain falls through.
To accept this, the agent wants to see a letter from a bank by the end of this week confirming that an "open-ended" bridging loan is in place. Any ideas on bridging loans? Who to go with? What's the cost? How long to get them in place? The amount is £570K. Our current mortgage lender is Abbey.
(a) If the chain is ready to move, why can't the whole chain exchange contracts?
(b) Why would the agents for the place you are looking to buy have any interest in pushing you to exchange early on your current place? In any case, this implies that you are ready to exchange with your buyer. Which in turn implies that the hold up is in the other direction - upwards. But there presumably is only one property in the up direction - the one you want to buy (probate, remember?). So the problem is with your seller. Ask their agent why he is holding things up.
Please clarify!
True.
'Therefore'? There is no 'therefore' about it. You need bridging finance in order to commit to buy without simultaneously agreeing a sale - the opposite of what you implied above.
However, it is at least more plausible that the seller's agent would be pushing you to do this. (But bridging finance is not an alternative to it, more of a prerequisite, surely?)
And in this case you won't risk ending up without a roof over your head, but with a choice of two roofs!
Again, this is confusing. You say that *you* suggested the bridging loan, and that having suggested it, the seller's agent is now *insisting* on it.
What action by the agent is conditional on seeing evidence of a bridging loan?
What will he do if he doesn't see it? Sell to someone else? Why isn't he already doing this if they are ready? Or will they all be queuing up with their open-ended bridging finance certificates on Monday morning?
Don't even consider it, even if you find you can get it (which is very unlikely IMHO).
Put the time and effort involved in getting the loan (and dancing to the tune of the seller's agent) into resolving the problem with your chain that is preventing you exchanging on your own property. You know it makes sense.
My guess (based on experience 20 years ago) is that you will find it hard to get an open ended bridging loan which you could not support from your income indefinietly. If you could support it (as well as any existign mortgage), then you might as well simply get a mortgage on the property you are buying and accept that will own two at the same time for a while.
As others have poitned out, it's not clear from the posting where the bottleneck is. If they are still waiting for probate for the house yo uwish to buy then a loan won't help.
Probate can take ages and it's often hard to predict when it will be granted. Have the executors paid the inheritance tax yet?
Firstly it is unlikely you will get one, they arent as easy to get as some think. You will need to pay interest at between £3.5k to £4k per month on top of all your other expenditure and whilst you think you may not need to draw on it the lender will need to be sure you have the income to afford it. I dont know what your other commitments are but (depending on the lender) you will need an extra income in excess of that needed to fund your current borrowing of about £120k p.a..
If you exchange contracts on the purchase then you are compelled to buy the new property no matter what happens. If any of the people in your chain fail (and it is odds on that this will happen) then you are in trouble. Every month that goes by will cost you £4000, think about it. Thats a lot of dosh.
Ah, but they would only need the new house to appreciate at around 8-9%pa to cover that 4,000pm. Or, if it appreciates at (eg) 4%pa, then it'll effectively only 'cost' them about 2,000pm (not 4,000pm).
Granted, they do need to be sure that they can cover the extra 4,000pm cashflow... [But their extra 120Kpa income (that you've already said the lender would require before they gave the bridging loan), will cover that.]
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