Bridging loans. Do we have a resident expert?

[Bowks]

Hi all,

We have a long term plan (18 months) to move up North. However, as is usually the case with plans, we have found a place up for tender closing in a couple of weeks. You have to be proceedable to bid and I'm certain the house is not mortgageable (no kitchen). We have set a limit and I'm not 100% confident we will have the winning bid.

If we win, Bowks Towers would go on the market and I'd expect a reasonably quick sale, even in this market. Our current house would pay for the new one plus clear existing mortgage.

In this scenario, is a bridging loan the correct vehicle and who is out resident expert?

[dalenorth]

We’ve got a really great guy In London who’s helped a lot of our clients. Drop me a pm if you wants Sean’s details?

[Jeremy-75qq8]

Just don't do it.

Friend did some years ago and lost his shirt.

I do distressed lending on property at eye watering rates so I am on the other side of ( mostly to developers who have over run and are optimists )

The risk is huge and the interest alarming. There will always be another house.

[kiethton]

Jeremy-75qq8 said:

Just don't do it.

Friend did some years ago and lost his shirt.

I do distressed lending on property at eye watering rates so I am on the other side of ( mostly to developers who have over run and are optimists )

The risk is huge and the interest alarming. There will always be another house.

This, as somebody helping their near 70 year old parents try to salvage some equity from their home due to one of these things and the mitigating point falling over (and the loan racking up 2.5% interest a month) I'd steer clear, especially in the current climate.

[cliffords]

As above with relatively high interest rates now and a fair bit of uncertainty, I could not think of a worse time to embark on something that is a bad idea anyway.

[OddCat]

For those on here with horror stories, it would be interesting to hear the scenarios, the numbers and what went wrong....

[Dimebars]

OddCat said:

For those on here with horror stories, it would be interesting to hear the scenarios, the numbers and what went wrong....

At a guess;

Loan approved at what is believed to be "acceptable rate" based on quick sale of existing property

Existing property fails to sell

"Acceptable rate" becomes unacceptable as time goes on and property doesn't sell

Shirt gets lost

[cliffords]

The key factor is rate escalators. Typically l the rate will increase after a pre agreed term. So in the example above the rate can increase significantly if the primary term is exceeded.

[MR2 Steve]

Most bridging lenders aren’t regulated. Since it’s for your personal home, that would fall under regulated lending making it hard to find a lender who could do it.

[Sarnie]

Bowks said:

Hi all,

We have a long term plan (18 months) to move up North. However, as is usually the case with plans, we have found a place up for tender closing in a couple of weeks. You have to be proceedable to bid and I'm certain the house is not mortgageable (no kitchen). We have set a limit and I'm not 100% confident we will have the winning bid.

If we win, Bowks Towers would go on the market and I'd expect a reasonably quick sale, even in this market. Our current house would pay for the new one plus clear existing mortgage.

In this scenario, is a bridging loan the correct vehicle and who is out resident expert?

I can help with this if you want to drop me a line, not a Bridging loan, but another way of doing this...........

[okgo]

Sarnie said:

I can help with this if you want to drop me a line, not a Bridging loan, but another way of doing this...........

Sarnie - what would that entail? I’ve often wondered what options exist in these situations.

[Alan-3jqm3]

What I did was get a buy to let mortgage on the home I had and used the money for the new one. Had to pay two mortgages for a while and there was an early repayment fee.
If you've got enough equity in your home, could you re-mortgage to get the cash?