Bridging loan?

I'd appreciate some advice about financing a house move. I would like to move home from England to Scotland. The current market value of my house is around 250,000 and my mortgage, taken out years ago, is

35,000. The kind of property I want in Scotland would cost around 175,000 - so I should be in the happy position of being able to buy outright from the proceeds of my sale and still have a bit of change left over after paying solicitors, estate agents, surveyors etc.

The problem is timing. I would like to be in a position to make an offer when I find the property I like (which would then be legally binding in Scottish law, unlike in England where an offer to buy "subject to contract" is meaningless ) even if I have not then reached the point of exchange of contracts on my sale (the equivalent legally-binding point in English law, but which comes much later in the process). What's my best way to achieve this? My existing mortgage lender will only offer limited bridging loan facilities, and only if contracts have already been exchanged on the sale (and possibly not at all if a new mortgage is not placed with them on the purchase!)

So, what are my options? Am I likely to find anyone offering open-ended bridging finance - and if so, at what sort of rate?

Reply to
George
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They ain't cheap.

The last open-ended bridge I did was at 1.5% per month. Funds were available for transfer in about 48 hours, IIRC.

AFAIK, the current rates are nearer 1% per month.

I suggest you speak to a specialist broker.

Reply to
Doug Ramage

"Doug Ramage" wrote

Eh? Why is a *bridging* loan necessary at all??

Why not simply re-mortgage the original (English) house at, say, 85% of value = 212,500. This will be a *normal* "first" mortgage - *not* a bridging loan. Use 35,000 to pay off existing mortgage, leaving 177,500 left over. Buy the new (Scottish) house outright, for cash.

Then, when the old house finally sells - pay off the 212,500 mortgage from the 250,000 proceeds - with some extra left over.

Reply to
Tim

Maybe the income multiples don't fit?

Self- Certification may be possible. But it is getting more difficult/impossible for employees - it should never have been used for employees, as it was never intended for them.

Reply to
Doug Ramage

In message , Tim writes

What if they dont have the income to substantiate that level of loan?

Reply to
john boyle

"Doug Ramage" wrote

There's always "non-status" instead.

Reply to
Tim

"john boyle" wrote

In that case, how would they even get the bridging loan?? If they can't afford a "normal" mortgage, then surely they won't be able to afford a bridging loan either?

Reply to
Tim

85%LTV might be pushing it for non-status.
Reply to
Doug Ramage

'Cos the interest can usually be rolled up.

Reply to
Doug Ramage

mortgage

Thanks for the input.

1% per month on a bridging loan seems extraordinary!

Re-mortgaging the existing house hadn't occurred to me as an option. I'm self-employed, so self-certification could certainly be a possible route - I can easily envisage that my future annual income would increase to an appropriate level as a result of the move :-) Is the fact that I would be intending to sell the house and pay-off the new mortgage within less than a year be a problem? And would the new mortgage lender be happy with a situation where only 16.5% of the advance is going to buy the current property and the remaining 83.5% goes into my bank account? Wouldn't a lender think that this is stretching equity release a bit?

Reply to
George

The high interest rate for open-ended bridges probably reflects its lack of certainty (timewise), its non-status nature, and lack of competition in this sector.

How the loan monies are disbursed would depend on which lender you use.

Reply to
Doug Ramage

Any idea as to which ones I might find "user friendly"?

Reply to
George

Just be sure your assessment of the house's value is accurate. You *will* be able to shift it, won't you? Impending crash, and all that... What if no-one will want to buy it off you at your (or any) price?

You don't have to tell them you're about to sell. Paying off early, even very early, is not a problem, provided you don't go for discount deals. If you for a straight SVR the terms usually let you repay "at any time".

?? What do you mean "buy the current property"? You already own it. Perhaps you mean "buy" as in pay off the existing lender, but that's not really buying. The lender doesn't own a chunk of it, he only has the right to re-possess if you fail to make the payments.

By the way, there is no need to think about re-mortgaging (in the sense of switching to a new lender). You can just get the *same* lender to increase the size of your loan.

Not necessarily. There's no need to make a secret of what you want the money for. Just tell them you want the money to buy another house.

Although it is normal to have a mortgage loan secured on the same house as is being bought, it is by no means necessary for it to be like that, and it's quite the done thing to mortgage house A to buy house B. The only thing you might want to keep secret for now is your intention to sell house A as soon as you can. Tell them house B is going to be an investment or something. You don't even need to pay BTL rates if the loan is secured on your unlet home instead of on the property being let.

They might not let you go as high as 85% for a further advance, or even a remortgage, but in that case why not simply go to a lower figure for house A and also raise a mortgage on the house B as well? Buy-to-letters do that sort of thing all the time, for instance if the lender will only give them 80% of the letting property, and they don't have the remaining 20% in cash, they can raise this by borrowing against another existing house they own, if the equity in that is enough not to take them over 80% either.

Reply to
Ronald Raygun

Then I'm in the mire! But you make a valid point - there is obviously some risk involved in buying property B before selling property A. And it is true that properties in this area (SE) do seem to be taking longer, on average, to sell than was the case a year ago. (However IMO this has a lot to do with sellers being greedy and setting silly asking prices on the back of a rising market (bubble?)) I'm not holding out for the top dollar; I'm quite happy to set an asking price a bit below what my friendly local Estate Agent might suggest.

Thanks for your other remarks - plenty for me to think about.

Reply to
George

In message , Tim writes

True 'Bridging' isnt assessed in the same way, you just have to prove you can afford the monthly interest. 'Income multiples' dont exist.

Reply to
john boyle

"john boyle" wrote

Agreed, but 'Income multiples' don't exist with "non-status" mortgages either ...

[It's only "affordability" that matters with either.]
Reply to
Tim

In message , Tim writes

But they cost about three times as much as 'bridging loans'.

With true 'non status' it isnt even affordability, its pure pawnbroking against the security.

Reply to
john boyle

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