Bridging loans... worth it?

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Is a bridging loan too risky to take?
We have found a house that we have fallen in love with, but the problem is that we have only just put our house on the market.
Bridging loans on average have interest rate of over 10% PA and have other associated costs and exit fees as well as the broker's fees.

If we take out the loan, we would have two mortgages to pay until our home is sold and in today?s climate it could be any length of time.
Even if we have found a buyer, the sale may fall through and we would be back at square one.
So I am just wondering if taking a bridging loan would be worth it or is it too big a risk to take and we may end up pouring money down the drain?

I think most of them work out at more than 10% pa, it's usually about 1% a month which might be manageable if you didn't also have to factor in punishing application and exit fees. Don't do it.

Do you have much equity in your home? Could you get a BTL mortgage on it, rent it out and get a residential mortgage to cover the new house? Just a thought.

We have equity on our existing home but the next property is more expensive and we would need to sell it. We are thinking about getting a 100K bridging loan, and i think it works out £850 of interest per month plus other fees. It's a very nice house but I am not sure taking a loan is a wise thing to do...... it could go all pear shaped and we lose £ 000's or we could lose the house we wanted.... I guess there is no guarentee we get the house even if we take out the loan. And even if we do get the house, all the extra financing cost of the bridging loan could have been better used for refurbishment.

It all depends on your own property? Is it in a desirable area? Are they in hot demand? If mediocre all round, I personally would not take the risk. If you think you would have a buyer within the month, i think I would go for it. Don't forget the length of the chain, which is imprtant too. Any one of those could break the chain and you are stuffed.

I had a bridging loan once. Most expensive thing I have ever done. Make sure you read in the T&C what their rates will be if it takes longer than planned, and the initial arranged loan period goes further. In my case, the penalty was £400 per day.... I would not do it.

I would rather investigate Buy to let and get tenants in than a bridging loan.

5 years ago we remortgaged our house on a interest only buy to let mortgage, we released all the equity doing so, and built a self build for the money, and let our house out. You can use the equity released as a deposit on the second mortgage. In theory, the potential tenants will pay the mortgage on your first house, and you will pay your mortgage on your second house.

How long has the house been on the market? Is it likely to sell fast? Is your house likely to sell quickly? Do you have enough cash to get to exchange (ie. 10% of purchase price)? If the sellers haven't found anywhere and you could promise a quick exchange, they might be prepared to give you several months to sell your own home after exchange while they looked for one for themselves. That is risky too, of course, but maybe better than over-financing yourself. Is the dream house on with the same agency as your home? If so, agents are often keen to sew up a deal between two clients for obvious reasons. If not and the same agency covers both areas, could you put your house on with them if you think it would make the agent more cooperative.

I would look for lots of other alternatives to bridging loans. Generally they are only used by people who know that they can restructure them pretty quickly eg, those who buy at auction and need to complete in 4 weeks but know that they can then convert to a "normal" mortgage within a few weeks of that. They are very, very expensive and that makes them a big financial risk if the period you need them for is open-ended.

Finally, dream houses rarely are: most people find that a house they like just as much or more comes on a few months after they lose The One .