Bridging loans or similar
Discussion
My mum is looking to buy a flat and downsizing from her 2 bed house .
There is a flat coming up shortly due to the owner going into care and there is an opportunity to buy it direct from the family
The flat will cost about £150k and my mums house is worth about £240k (No mortgage)
She can lay her hands on about £50k cash
Ideally she would like a crossover period to allow her time to refurbish the flat ie new kitchen, bathroom , decoration etc before selling her property.
What options are available with regards to financing the flat short term ie 3 months or so ?
I have heard about bridging loans but these appear to be a very expensive option
There is a flat coming up shortly due to the owner going into care and there is an opportunity to buy it direct from the family
The flat will cost about £150k and my mums house is worth about £240k (No mortgage)
She can lay her hands on about £50k cash
Ideally she would like a crossover period to allow her time to refurbish the flat ie new kitchen, bathroom , decoration etc before selling her property.
What options are available with regards to financing the flat short term ie 3 months or so ?
I have heard about bridging loans but these appear to be a very expensive option
You need to seek professional advice, but I do know that bridging finance is more difficult to arrange than it used to be, and is generally very expensive due to the short term nature and the high risk involved to the lender.
An alternative option may be for your mum to buy and sell simultaneously, and then just rent somewhere while the work is being carried out. That way you do have the cost of the rental, but I can't imagine it would cost any more than the bridging finance, and there would be no risks involved in the event of her having a problem selling her home.
An alternative option may be for your mum to buy and sell simultaneously, and then just rent somewhere while the work is being carried out. That way you do have the cost of the rental, but I can't imagine it would cost any more than the bridging finance, and there would be no risks involved in the event of her having a problem selling her home.
Im in the process of buying a new place. Two sets of buyers fell through on our existing house, so we are getting a BTL mortgage on existing property. Will then put it back on market. Managed to find a mortgage where the ERC is only a few hundred quid. Fingers crossed we sell it quickly!
Or just rent!
Or just rent!
Edited by covmutley on Wednesday 14th October 12:58
liner33 said:
Five years of interest payments would be far more than 6 months rent though , a bridging loan would be far cheaper
I think you are misunderstanding.........yes the minimum term for a mortgage is five years, but that doesn't mean you have to keep it for five years, you can redeem it at anytime..............and you don't have to pay five years worth of payments just whatever the ERC is, which can be zero if you source the right product.....
Bridging loans are expensive. As a guide your costs would be roughly this:
- 2% arrangement fee
- 1% broker fee
- Valuation fee (est £500)
- Lender's lega fees (est £750)
- Your own legal fees (set £500)
And then for a regulated bridging loan like this of £100,000 at about 66% LTV you're probably looking at about 1-1.25% per month.
Most of the above fees can be added to the loan (except the valuation fee) and you don't have to make any monthly payments as it can all be rolled up and paid at the end.
If you need any help here, let me know.
- 2% arrangement fee
- 1% broker fee
- Valuation fee (est £500)
- Lender's lega fees (est £750)
- Your own legal fees (set £500)
And then for a regulated bridging loan like this of £100,000 at about 66% LTV you're probably looking at about 1-1.25% per month.
Most of the above fees can be added to the loan (except the valuation fee) and you don't have to make any monthly payments as it can all be rolled up and paid at the end.
If you need any help here, let me know.
Sarnie said:
liner33 said:
I understood the minimum period for a mortgage was usually 5 years
It is.......doesn't stop you taking a mortgage over a longer term but then redeeming it....megapixels83 said:
Someone said he thought the minimum period for mortgages is 5 years. just stating mortgages are what ever period a lender wishes to offer.
Unless I'm missing something a 2 year fixed mortgage is only referring to the "fixed" period of the interest rate. That actual term of the mortgage will be longer; 5yrs+. After the fixed period you automatically move to the companies SVR for the rest of the mortgage term or until such time as you remortgage.Gassing Station | Finance | Top of Page | What's New | My Stuff