Bridging loans?

[MeltorPeltor]

Has anyone ever taken out a bridging loan to secure the purchase of a new house?

Our house has just gone on the market, but we have found our dream home and we need to secure it now, the vendor won't wait for us to sell (our house is fairly desirable and should sell in a couple of months) so we don't have time to hang around, we were wondering about getting a bridging loan?

Are they doable for normal people? Google seems to suggest that they are really only available to the super rich, which sadly we are not. We could though afford to pay two mortgages in the short term.

They are absolutely doable for normal people. The "trick" (it isn't really) to them is that you need a defined exit - i.e. you need to be sure that funds from your house sale will be with you within the timeframe of the bridging loan.

Good to know, I have emailed our mortgage adviser to ask. We could probably sustain two mortgages for a year or so, we had hoped our house would sell in a few weeks and whilst we have interest no one is moving quickly enough for us to secure the new one.

I am about to complete on a purchase using a bridging loan (fingers crossed!). I have an excellent adviser who I would thoroughly recommend and is miles away from the shark wheeler dealer I'd been recommended before, who claimed he knew someone who could get the best deals ever in bridging, only to try to sell me a totally dud product.

Bridges are a lot more doable because interest rates are so low. It's quite complex taking it out and eg. there are a lot more fees involved including another set of solicitors fees as the bank/lender instruct their own solicitors for the transaction, separate from your own.

Are you absolutely sure your house will sell? What if house prices fall?

The reason I ask is that our currant house was sold as part of a bridging loan, it took four years to sell, kept coming on the market then rented out for 6 months . Eventually the vendor had to drop the price by a considerable amount .

Good luck

Bridging loans seem to be a lot more difficult to get these days than when we had one 15 years ago.

What we did when we were in a similar position at the end of last year was to buy the house we wanted with a second residential mortgage until ours sold. Obviously you need to have enough of a deposit to do that.

From my recent experience, it's clear the lender is very focused on knowing with almost complete certainty that they will get their money back. They factor in potential price falls. Mine wanted lots of clear assurance re how we would exit the bridge in varying circumstances.

We did it recently. Not super rich! The total mortgage across both properties though was within what the bank would lend us anyway.

You need equity in the house to do it. The max the bank would bridge to was 85% value which gave us enough to place a decent deposit on the new house.

If you need to go beyond what they calculate as affordable it may be harder.

Our old house was in an area popular with first time buyers so low risk for us on not getting a sale. We sold within 4 months of moving.

Should add that you need to consider the extra stamp duty too. We had to pay 9k instead of 2k and are now claiming the 7k extra back having sold our old house. That's a big sum on to the cost of moving and what stretched us the most as it's all paid on completion

I didn't realise that about the stamp duty, that would take stamp duty up to £26k!

We've decided that although we like the house, we aren't going to 'waste' money trying to secure it, we could afford the bridging loan for up to a year it would be a massive waste of money, we do love the house but we are also quite (lol) sensible with money.