Bridging loans

[LollieB]

We are considering g placing an offer on a property (need to move quickly because of school applications). The property will be part funded by inheritance which is going through probate and due to be settled soon. We are just a bit concerned that the probate might take longer than expected and we'll be left with a shortfall for the property. Does anyone know about bridging loans and how easy they are to get/are they really expensive. Are there any other ways of bridging g a shortfall of this kind if we have evidence that the money from the inheritance is coming?

I made a very informal enquiry about a bridging loan about 6 months ago and was told they are very expensive, about 10% interest.

I stand to be corrected but I think there are also quite high arrangement and legal fees.

Probably doable if you're not looking to borrow too much for too long and you have enough in your budget.

Yes, they're really expensive. I've seen them advertised for very short periods (six-month limit) at large application fee (a couple of grand) then 1% of the borrowed amount a month, so a £100,000 loan would cost you £8,000 in that first six months, I don't know if there are redemption fees thereafter. They can only be used if you are extremely sure of getting the money to pay them off within a short period.

You say that your house purchase will be part-funded by an inheritance - does that mean that you will be taking a conventional mortgage on the remainder of the price? I'm not sure if you can get two mortgages on a single property - you need to look into this. Would it be more sensible to rent in the area you wish to move to and then buy when your finances are sorted out?

We got a mortgage with no penalties for early repayment and then paid a large chunk off when money came through. Could this be an option? Does depend on you being able to get the larger mortgage.

We are actually funding the other part of the purchase with the sale of our current property. We could move into rented, but we've been waiting for a rental property to come up in this particular outstanding primary school catchment area four four months now and nothing has come up. School application deadlines are looming and we have just enough time to push through the conveyancing on a property which has come up within the catchment area if we can bridge the gap until the inheritance comes through. It's a bit of a catch 22 situation.

Getting a mortgage to bridge the gap has been difficult, as me and my husband have just started freelance careers. We have other assets as security, but getting a mortgage has been difficult.

Bridging loans are notoriously expensive. They are like the payday loans of the mortgage world.