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How to bridge £250k for a few months at minimum cost?

My wife and I live in a flat (fully-paid) that I own and are planning to move to a house this year.

We have just found our dream house on the market, however we are not yet ready to sell our flat since it still needs some work done on it.

We have enough liquid capital to purchase 75% of the new house outright, and our flat has recently been valued at double the outstanding shortfall. ie, if we sold the flat, we could buy the house outright without mortgage.

However, since we do not want to risk losing this house, we want to see if we can arrange credit for the 25% outstanding on the house, buy it now, then sell the flat (as quickly as possible) and use the money from the flat sale to pay off our credit arrangement.

But we have a problem: I am currently unemployed and my wife earns £25k pa. The shortfall is £250k. Even the most lenient income multiple will allow us to borrow less than 40% of the amount we need.

As you can see, we have enough assets to allow us to be unfinanced at the far end of the process (when we own only the house). The tricky bit is how to juggle our finances in the transition (when we need the 250k additional financing), especially due to our low income.

Even if we tried to remortgage our flat to release the required funds (which we would rather not do - we'd be trying to minimise fees and ERCs), we feel that we'd probably still have difficulty raising the figure due to our low income.

Can anyone suggest any financial wizardry/cunning plans to enable us to get this sort of money (ideally with minimal fees and early redemption charges).

One final piece of information: the estate agent who valued our flat has said that he feels it will not take long to sell when on the market.

Thank you for any advice, suggestions and comments.

John M

Reply to
JohnnL
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Use a buy-to-let mortgage for either the house or the flat (in which latter case it will probably be called let-to-buy). These loans are not limited by income multiples, but by the size of the likely rent you might receive. Some lenders require you to have *some* non-rental income too, but often £15k is enough. Interest rates are a little higher than with the "normal" mortgages, but as you're not expecting to keep the loan for long, that won't matter.

It would probably be better to keep back maybe 20% of your cash mountain (i.e. pay a smaller deposit) both to act as a cushion to pay your loan interest, and to fund the "house doctor" work on the flat.

Reply to
Ronald Raygun

This could be the cheapest option, as most High Street banks won't do open bridging. The main reason for their reluctance is it can be very risky, especially in a falling market (like at the moment).

Another alternative is non status bridging at around 1% per *MONTH*.

Reply to
Doug Ramage

JohnnL:

Are you sure about that? With the popularity of TV property programmes, you might still find some idiot who thinks they can do it up for less it would cost you to have it done, and you might be better off selling to them without doing any work. That also eliminates the cost and inconvenience of a bridging loan!

You should find someone that gives you a 25% mortgage on the house, ignoring your income. With such a low loan-to-value it's completely risk free for the lender. Any lender who has some human that can bypass the computer rating system should. You could try to get a buy-to-let mortgage, that should be straightforward and be based on the (theoretical) rent you'd get on the house, which should cover several times your mortgage. In all cases you must check it allows early redemption.

Reply to
nenieorg

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