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Original poster

Can someone explain a Bridging Loan to me? Please.

12 replies

Tinker · 15/05/2006 13:27

Know, vaguely, that people have these when can't sell old house and have moved into new one. Are you simply paying teh equivalent of 2 mortgages? Assume not because there wouldn't be a name for it. Presume it's cheaper than paying 2 mortgages but for limited period? Simple explanation much appreciated.

OP posts:

SaintGeorge · 15/05/2006 13:31

If you don't complete the sale of your 1st property but are relying on the sale for funds for the 2nd property then you get a bridging loan.

It effectively is a short term mortgage to cover the missing funds. They tend to be at high interest rates and to be avoided if at all possible.

Piffle · 15/05/2006 13:31

It is when you get the temporary facility of an amount to cover the outstanding mortage on your old home and the new mortgage on your new home... Very expensive option to be honest, it generally requires a high amount of equity or the rate soars. If you are certain upon certain that your previous home is about to complete then to ensure you get the house of your dreams, it's feasible for 4-6 weeks tops.
Banks very quick to turn shitty if it ends up longer... So I have heard

Original poster

Tinker · 15/05/2006 13:33

Ah, thank you both. Not a long-term option in order to move before selling then?

OP posts:

SaintGeorge · 15/05/2006 13:33

The cheaper method would be 2 mortgages but most people probably wouldn't be cleared by their lenders for 2, based on income. They might however grant them a bridging loan, based purely on the assumed short term and the immediate repayment when the property is sold.

SaintGeorge · 15/05/2006 13:34

Deffo (copyright RTKM) not a long term solution.

Original poster

Tinker · 15/05/2006 13:35

Damn! Thanks anyway.

OP posts:

babaworshipper · 15/05/2006 13:36

We are v lucky then as our bank is allowing us to have both mortgages and releasing the equity on our existing property to cover the extra on the purchase price.

Both mortgages at normal rates and equity at variable rate with a fee of £90!

MamaMaiasaura · 15/05/2006 13:37

i used a bridging loan to buy first house to cover diff whilst waited for cash back from mortgage deal (as used bridging loan for deposit) and then cash back to pay off bridging loan..

Original poster

Tinker · 15/05/2006 13:40

Have you got a buyer then babaworshipper?

OP posts:

Piffle · 15/05/2006 13:46

Exactly baba they are much easier on you if you have good equity.

controlfreaky · 15/05/2006 13:48

you dont need to know.... you def dont want one.

babaworshipper · 15/05/2006 13:56

Yep and missives concluded. It was apporved in principle with a buyer but they wouldn't actually release any money until missives concluded. I wonder if the scottish system makes things easier.

My inlaws once bridged for a year god knows what it cost them.

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