Bridging loan?
Discussion
I am about to sell a large house with a view to buying 2 smaller houses. The house is mortgage free. I would like this to be as hassle free as possible.
To make the logistics easier I'm thinking along the lines of finding Small House 1 first and buying this via a bridging loan of sorts.
This gives me freedom to take my time selling the Large House plus finding Small House 2.
It's 20 years since I bought a house. Is this is a reasonable approach?
If so any recommendations of the best way(most cost efficient)of achieving this, who to use etc.?
Also what is the best way to handle large temporary funds when Large House is sold as I may rent for a while before finding Small House 2.
I don't have a normal work set up so any references on that score could be tricky.
Thanks.
To make the logistics easier I'm thinking along the lines of finding Small House 1 first and buying this via a bridging loan of sorts.
This gives me freedom to take my time selling the Large House plus finding Small House 2.
It's 20 years since I bought a house. Is this is a reasonable approach?
If so any recommendations of the best way(most cost efficient)of achieving this, who to use etc.?
Also what is the best way to handle large temporary funds when Large House is sold as I may rent for a while before finding Small House 2.
I don't have a normal work set up so any references on that score could be tricky.
Thanks.
Bridging loans are bloody expensive and usually only last 6 months and are limited to 70% (or there about) of market value of a property your buying.
Normally a loan costs 10% of the amount you need.
With a bridge loan you should have an exit plan in place, what if your big house doesn't sell?
A better option may be a sale of your current house with delayed completion (so sell it exchange contracts with a move out date a few months later) that could be a fair option for a bridging loan exit plan.
A cheaper and safer option maybe to sell your current house, go rent somewhere for 6 months.
And before anyone starts about lining a landlords pockets it may be a cheaper option than lining the pockets of a bridging loan company.
Good luck
Normally a loan costs 10% of the amount you need.
With a bridge loan you should have an exit plan in place, what if your big house doesn't sell?
A better option may be a sale of your current house with delayed completion (so sell it exchange contracts with a move out date a few months later) that could be a fair option for a bridging loan exit plan.
A cheaper and safer option maybe to sell your current house, go rent somewhere for 6 months.
And before anyone starts about lining a landlords pockets it may be a cheaper option than lining the pockets of a bridging loan company.
Good luck
Sarnie said:
Bridging loans are expensive.............why not mortgage the current property in the normal way to buy the first property, on a product with no ERC's, and then buy the second house when the original property sells?
Don't forget the extra 3% SDLT for the new property......
good point about stamp duty, makes my point about temp renting a much better option :-)Don't forget the extra 3% SDLT for the new property......
Thanks chaps.
Sorry, incomplete info. Small House 1 is for the soon to be ex-missus. In ongoing negotiations I want to be able to say, there's the cash for your house, now Foxtrot Oscar. So money available as soon as possible really would put me in a strong position (she's desperate to move out and wouldn't have to wait for sale of Large House).
This would then leave me free to handle the rest of it without earache. Large house is a one-off so difficult to price and if at all possible I would like the leeway to test the market at my leisure. Everything has a cost though so if the interest is prohibitively expensive that would affect my decision.
Although I have largish equity I have no regular official income so I'm guessing that also makes certain mortgages difficult?
Don't really understand the Stamp Duty point. Was that based on my owning 2 houses (which wouldn't be the case).
Sorry, incomplete info. Small House 1 is for the soon to be ex-missus. In ongoing negotiations I want to be able to say, there's the cash for your house, now Foxtrot Oscar. So money available as soon as possible really would put me in a strong position (she's desperate to move out and wouldn't have to wait for sale of Large House).
This would then leave me free to handle the rest of it without earache. Large house is a one-off so difficult to price and if at all possible I would like the leeway to test the market at my leisure. Everything has a cost though so if the interest is prohibitively expensive that would affect my decision.
Although I have largish equity I have no regular official income so I'm guessing that also makes certain mortgages difficult?
Don't really understand the Stamp Duty point. Was that based on my owning 2 houses (which wouldn't be the case).
Stamp duty was based on you having 2 houses.
Please check the rules.
Im sure if your partner is named on your house and buys another it applies
If your selling 1 house to buy another and you end up owning 2 houses even just for a few days Stamp duty applies
The rules are awful.
I have no regular income as such (i'm on a rolling contract) and in the same camp , can't get a mortgage.
Where you based, I assume up north? Reason I ask is I know a few people who invest in property so may be able to point you in their direction if you want a quick sale. PM me if you wish. Bear in mind selling to investors is not for everyone as most expect a bargain.
But if your considering a bridging loan, stamp duty issues and estate agency fees then a quick sale can sometimes be an option.
Please check the rules.
Im sure if your partner is named on your house and buys another it applies
If your selling 1 house to buy another and you end up owning 2 houses even just for a few days Stamp duty applies
The rules are awful.
I have no regular income as such (i'm on a rolling contract) and in the same camp , can't get a mortgage.
Where you based, I assume up north? Reason I ask is I know a few people who invest in property so may be able to point you in their direction if you want a quick sale. PM me if you wish. Bear in mind selling to investors is not for everyone as most expect a bargain.
But if your considering a bridging loan, stamp duty issues and estate agency fees then a quick sale can sometimes be an option.
I've been involved in a few sales recently whereby the individuals have done exactly what you suggest. Usually downsizers with lots of equity in a large house.
In all the cases, the large house sale has taken longer than planned and the bridging loan has become and expensive and tiresome weight on the owners shoulders.
In one circumstance the old boy got so stressed out by the payments each month he drastically reduced the price of the main house just to get it sold and clear the loan. So, the actual cost of the loan when you take in to account the "fire sale" of his house was huge.
In all my time selling houses I have not had a single person turn round with hindsight and say the bridging loan was a good idea.
In all the cases, the large house sale has taken longer than planned and the bridging loan has become and expensive and tiresome weight on the owners shoulders.
In one circumstance the old boy got so stressed out by the payments each month he drastically reduced the price of the main house just to get it sold and clear the loan. So, the actual cost of the loan when you take in to account the "fire sale" of his house was huge.
In all my time selling houses I have not had a single person turn round with hindsight and say the bridging loan was a good idea.
528Sport said:
Stamp duty was based on you having 2 houses.
Please check the rules.
Im sure if your partner is named on your house and buys another it applies
If your selling 1 house to buy another and you end up owning 2 houses even just for a few days Stamp duty applies
He wouldn't own two properties in this scenario, just one, if he's giving the money to his ex to buy a place.Please check the rules.
Im sure if your partner is named on your house and buys another it applies
If your selling 1 house to buy another and you end up owning 2 houses even just for a few days Stamp duty applies
The ex may incur the SDLT if she is still named on the original property.
OP: my original point above still stands;
"why not mortgage the current property in the normal way to buy the first property, on a product with no ERC's, and then buy the second house when the original property sells?"
Sarnie said:
528Sport said:
Stamp duty was based on you having 2 houses.
Please check the rules.
Im sure if your partner is named on your house and buys another it applies
If your selling 1 house to buy another and you end up owning 2 houses even just for a few days Stamp duty applies
He wouldn't own two properties in this scenario, just one, if he's giving the money to his ex to buy a place.Please check the rules.
Im sure if your partner is named on your house and buys another it applies
If your selling 1 house to buy another and you end up owning 2 houses even just for a few days Stamp duty applies
The ex may incur the SDLT if she is still named on the original property.
OP: my original point above still stands;
"why not mortgage the current property in the normal way to buy the first property, on a product with no ERC's, and then buy the second house when the original property sells?"
I was thinking of the scenario in the start of this topic.
Quote
"I am about to sell a large house with a view to buying 2 smaller houses"
If the OP then buys a smaller house for himself before selling the larger house then Stamp duty will apply at 3%. If he's buying for his ex and her name is on the larger house stamp duty will apply for her as well and I guess she'll want that off the OP to cover costs.
The OP also points out it will be hard for him to get a mortgage. Quite complicated
Really useful info all. Many thanks.
Large House is 100% in my name (ah the joy of giving half of it away! Separate topic!) so sounds like I'm OK on the stamp duty then. I will be giving cash for her to buy it in her name (she currently has nowt).
My aim is to at least have a go at getting top price without pressure from the missus to sell quickly. I live in a trendy desirable Northern village; mate down the road took 3 months to sell his bigger house at >£1m recently. One not dissimilar to mine has just sold in a week ( I thought it was way underpriced). Also don't want the hassle of 3-way chains for moving.
Don't want to give it away to investors, I want to try and catch someone moving up North who can't believe what you can get for the money! Has happened a few times around here.
Frank, that is exactly the nightmare I want to avoid, huge stress and opposite of the desired effect. Thanks for the warning.
Mortgage sounds good but I don't think I will qualify.
Hmmm, as you say complicated.
Large House is 100% in my name (ah the joy of giving half of it away! Separate topic!) so sounds like I'm OK on the stamp duty then. I will be giving cash for her to buy it in her name (she currently has nowt).
My aim is to at least have a go at getting top price without pressure from the missus to sell quickly. I live in a trendy desirable Northern village; mate down the road took 3 months to sell his bigger house at >£1m recently. One not dissimilar to mine has just sold in a week ( I thought it was way underpriced). Also don't want the hassle of 3-way chains for moving.
Don't want to give it away to investors, I want to try and catch someone moving up North who can't believe what you can get for the money! Has happened a few times around here.
Frank, that is exactly the nightmare I want to avoid, huge stress and opposite of the desired effect. Thanks for the warning.
Mortgage sounds good but I don't think I will qualify.
Hmmm, as you say complicated.
Sarnie said:
Why would you not qualify for a mortgage?
Only from hearsay really. I don't understand the credit market at all. Never been in debt apart from mortgage which is now paid off plus pay off credit card bills every month.I'm a professional gambler in my early 50s but have no official evidence for earnings at all.
I do seem to remember trying to get a One Account years ago as that would totally suit my lifestyle but the bloke just laughed when I told him what I did.
I only want to borrow for a short period of time then pay it off from the equity. Is that doable do you think?
Thanks for everyone's input.
Northbloke said:
Only from hearsay really. I don't understand the credit market at all. Never been in debt apart from mortgage which is now paid off plus pay off credit card bills every month.
I'm a professional gambler in my early 50s but have no official evidence for earnings at all.
Do you not submit an annual tax return or have a bank account? These and other items (such as a statement from your solicitor) can be used to give confidence to lenders.I'm a professional gambler in my early 50s but have no official evidence for earnings at all.
Good luck!
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