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Advice needed about buying property/bridge loans

(17 Posts)
SleepForTheWeak Sun 03-Jul-16 22:22:55

DH and I are completely useless at this kind of thing, we are going to speak to the bank and solicitor but any advice from you guys would be greatly received.

We are currently living in a property which cost us £85,000 three years ago. We put down a 10% deposit and have a 30year mortgage.

The house is fine, but we would like somewhere bigger. The area that we live in has a VERY slow moving market, and few houses come up on it.

One has caught our eye, however, and is on the market for £120,000. It should be within our means to pay the extra monthly cost, but we would need to sell our house before being able to buy the next.

How does it work? There are similar houses as ours been on the market for well over a year, what would happen if we put ours up but the other one sold before we could sell ours?

How do bridge loans work? Or is there something else that can be done in this situation?

Rangirl Sun 03-Jul-16 22:28:19

Get advice from a good mortgage advisor Open bridging which is what you are looking at is very difficult to get Mortgage adviser will be able to look at all the options

whois Sun 03-Jul-16 23:24:59

Oh god don't get a bridging loan - not in the current brexit falling house price fear environment.

CotswoldStrife Sun 03-Jul-16 23:35:11

As Rangirl mentioned, bridging loans without an end date are tricky to get (or they were when we looked into it about 6 years ago!) and you would need to consider how you would pay two loans (the interest on the bridging loan and the mortgage) at the same time.

Your own property is not on the market at the moment, is that right?

BackforGood Sun 03-Jul-16 23:52:33

The way it works for the vast majority of us, is that you put your house on the market first, then, once under offer, you can start putting in offers on other houses. If you are lucky it works out that all can go i a chain and move on same day. If not, then you sell and move in with friends / relatives or into rented accommodation and then are in a great position to buy when the next house you like comes up.
Bridging loans - even if you were able to find a lender - are very expensive and not to be recommended.

SleepForTheWeak Mon 04-Jul-16 08:07:05

Thank you. Sounds like a bridging loan is perhaps to be avoided.

No, our house isn't in the market. This is the awkward thing, there are no other houses on the market where we live that want/can afford, so if this other house sells before we have sold ours then it puts us in an unfortunate position.

To make the situation even worse, the lady who is selling unfortunately has terminal cancer. She wants to sell her property and downsize, presumably so she has the capital and will have taken the pressure off of family.

So, if she passes away before we are able to buy, it will then belong to her family. She is selling privately at the moment but they will probably put it on the open market and may be looking for more money.

How about renting our property out until we sell it? Do people do that?

Rangirl Mon 04-Jul-16 08:30:25

Do you need the equity out of your house If not you could remortgage it on a BTL basis and rent it out Additional stamp duty though (?) Will your own house sell quickly Offer with a long entry and price yours competitively for a quick sale So much depends on your circumstances and the local market but it is not impossible Take some advice from decent solicitor/mortgage adviser ASAP Good luck

LIZS Mon 04-Jul-16 08:42:20

If you rented your property out you'd need a let to buy mortgage which attracts higher interest rates and you'd pay second home duty on your purchase. Can you afford to have void periods with no rental income and still cover your repayments, council tax, utilities on both properties? If you came to want to sell you'd need to give legal notice to tenants and have buyers prepared to wait or not market until EY have left. Bridging loans tend to be used as short term way of keeping a chain going and cost £££.

SleepForTheWeak Mon 04-Jul-16 12:54:29

Our options are very limited then! It's a shame we have no savings, DH earns quite well and I work part time while DD is young. We are rubbish at putting money by, by maybe this is our only option and we will just have to bide our time until we can afford a deposit on a larger house without selling ours.

CotswoldStrife Mon 04-Jul-16 13:41:18

It is unlikely that anyone would accept your offer to buy their property if you can't conclude the sale (ie, pay for the house). There is more to it than the deposit. Most people sell their own house first and then make an offer on the property they want.

InternationalHouseofToast Mon 04-Jul-16 13:55:53

You could look at one of those "we buy any house" type brokers, but they tend to offer a lot below the market rate - would you have enough equity to make this feasible or would it put you into negative equity?

My friend used them when they had to move for her DH's job and their property wouldn't sell, as a last resort.

SleepForTheWeak Mon 04-Jul-16 18:39:04

I could look into that, see what they would offer, although I think that would put us into negative equity.

The main issue is that houses here move veeeeery slowly, so if we put ours on market it could take 18months to sell, then we are limited to the houses on the market at that time (and the one we like and can afford monthly might not be there).

It's sounding more complicated than I thought it would be, that's just life though I suppose!!

Imperialleather2 Mon 04-Jul-16 19:24:15

If she wants to down size could you do a swap?

SleepForTheWeak Mon 04-Jul-16 20:07:35

I did wonder that imperial, but she would be swapping a 4 bedroom for a 3 bedroom so still more than she needs and think she's just wanting to get a wee flat which is easy to keep

CityDweller Mon 04-Jul-16 20:40:16

First thing is to talk to an estate agent about putting yours on the market - they will give you a better picture of the local market and how well you can expect yours to sell. You may be pleasantly surprised.

bilbodog Mon 04-Jul-16 21:19:04

If the housing market moves slowly in your area then surely her house will also sit around for a while? My sister lives in an area like this and it took 2 years to sell her house - but the house t hey wanted also hung around that long so they were able to buy it. If you r eally want the house you could put yours on the market and see what happens - if the other house goes before you have a buyer you could just take it off the market.

Chillywhippet Mon 04-Jul-16 23:39:57

We are separating the purchase of our new house from the sale of our current one. it is only possible because we have a small mortgage on current house.

We asked broker about bridging loan but this would have been very expensive. So we are remortgaging our current house with a buy to let mortgage to raise the deposit and vicious stamp duty for new house.

We will get extra stamp duty refunded if we sell within 36 months, I think.

We can take our time to sell our current house or rent it out if it doesn't sell. We do have experience with rental properties. The tax relief on mortgage interest is being removed/reduced which makes buy to let much less profitable.

Most of stress on the buying and selling threads is about the problem you are grappling with, lining up chains of buying and selling. We are really lucky to be able to proceed with our purchase without having to secure our buyer first but it has meant wading through two mortgage applications which has felt a bit crazy at times with all the extra info required nowadays.

Oh for the bad old days when DH, self employed, could just self certify - literally just sign to say he earned £X a year. This time we have had to provide accounts, hmrc certificates, 6 months bank statements for every bank account all X 2.

Never again.

In the past when we had less capital and income we have sold and moved into rented. It's a hassle but means you can be in a great position when something comes up. Good luck.

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