Bridging loan? loan? Short Mortgage? What's best?

[MissCherryCakeyBun]

I've got a head full of figures and I can't make sense of it all.

We have found a house we would like to buy and it's £375k it's just perfect for us and empty chain free purchase

Our current house (£235k approx) we are mortgage free but it needs some minor TLC before going on the market such as some decorating and the driveway being completed etc.

DH's Inherited property (£895k) is due to complete in 3 weeks time (FIL passed away last year and the house is being split 40/40/5/5/5 between DH SIL and 4 Grandkids)

So as we would like to buy the new property and move in before selling our house (I have a disability and both have work commitments which would make this vital) I understand we would pay higher stamp duty as this would be a 2nd property but this can be claimed back when it becomes our main residence so that parts covered. However how do we bridge the financial gap? We are both in full time employment total income around £85k before tax and no dependents. The kicker is our ages 59 and 54 so a mortgage would probably be declined due to our ages and we just can't work out a way forward that is viable and not extortionate interest rates.
I seem to be struggling to make sense of it and DH has severe dyslexia so it's difficult to run figures past him.

Does anyone have any experience of this sort of sale and what the sensible options are?
Thanks so much I would hate for the house we love to slip through our fingers because if got menopausal brain fog 😶‍🌫️

The inheritance figure needs to be split I forgot to say that

I viewed a house recently where the vendors were thinking about getting a bridging loan to move into a new build. I can't put the exact figures on it, but the setup fees they wanted for the loan was something really, really horrible like 8-12k. The loan repayments amounts weren't horrific iirc, but people (at least, these people) were getting absolutely fleeced on the costs involved in just setting one up in the first place.

Have you looked at the set up costs?

You have my sympathy from personal experience. Having physical needs that limits your housing flexibility absolutely sucks.

Am I understanding correctly you need to finance the shortfall between your DH’s share of the inheritance (40% of 895k so 358k) and the cost of your new house being 375k. So 17k?

Surely this is doable by taking out a small mortgage on your existing house worth 235k?

I’d speak to a mortgage broker. I have no experience/not an expert but I can’t image your age would count against you when you have so much equity plus an income…

or have I misunderstood something?

This is what I thought too, plus stamp duty, feeds, moving expenses etc.

I think you need a small mortgage against your existing property OP. Even if it were £50k that should be achievable at your age with your income and with your assets.

@KievLoverTwo thanks so much, it's not easy is it  it's like yet another hurdle once you find a property that works for accessibility. We are determined to make this work as it's future proof too.

@Feedmeallthebbq @User19844666884 thanks both, yes that makes a lot of sense. We will sit and look at costs and then talk to a mortgage advisor.... brain fog is a horrible thing it literally makes it impossible to see things clearly like this. I really appreciate your ideas and help.

The thought of a bridging loan and owning 2 houses at the same time has always scared me due to potentially high costs. This would be even more scary at a time of relatively high interest rates.

Tbh I wouldn’t be looking at new houses until my current house was on the market & preferably under offer. That way you can coincide your sale with your purchase so no need for a bridging loan. I don’t understand how having work commitments & disabilities make this not possible. You don’t need to buy a house that needs work doing to it to make it habitable. Couldn’t you find one (once yours has sold) that is already largely suitable for your needs so just needs minor adaptations once you get the keys?

Is there any way that any of the other beneficiaries of FIL estate would loan you some money until your other house sells?

When you say due to complete have you exchanged yet? This would be my worry as the market is so volatile the buyers might pull out.

What about inheritance tax? If the house being sold is 895k then the estate is liable for it. Has this been accounted for?

@PieonaBarm that's all paid and settled the probate has been granted. We will actually be getting a small rebate as the house didn't sell for what was quoted on the documents and sold for slightly less.

@Twiglets1 for us this is the only way forwards. We will move over a period of a few weeks as I have the energy and time to move. Getting stair lifts and the like installed is not a quick and easy business. If you think getting internet installed is a pain? adaptations can be a whole heap worse

Being a cash chain free buyer puts us in a very good position it's just the shortfall that needs to be dealt with for around 3 months. Houses ( family homes with home offices especially) here in the southwest are selling very quickly

Dont underestimate the amount of time it will take until the estate is finalised. We completed on a flat in a relatives estate (my parents are the executors) in April after nearly 4 years of working through the estate (covid, change of solicitors, trying ti find beneficiaries in other countries, the delays were incredible). Having now sold it, the HMRC need to be happy with the amount it sold for, the amount it was valued at at the start of the probate period, probate was issued back in Feb I believe but we are told it will still take at least 3 months and possible until September until HMRC are ready to confirm the amounts/accounting

I dont know if that is because of backlogs they have or if its just the time it takes.

How much is the inheritance likely to be? If the house the majority of the estate? Or is there cash involved as well?

If it's "only" the 30k or so that 40% of the house represents as a missing lump between cash and purchase price plus costs, I think I'd try and get a loan over 5 years or so with no over payment penalties. I think the amount is too low for mortgage.

Speak to a mortgage adviser. We needed to take out a smallish mortgage earlier this year to pay for renovation work on a house we'd bought as cash buyers. We're in our 40s and 60s and one of us is retired so I thought it would be difficult.

But no, didn't bat an eyelid about our ages or status. We got a 10 year mortgage. Apparently a mortgage past retirement age varies by provider but it can be up to age 75 or even 85(!). So they're not going to be bothered about two people in their 50s!

We are overpaying and intend to pay it off early though as don't particularly want one of us with a mortgage in their 70s!

And, yes, you can get a mortgage for a relatively low amount. We found that a personal loan up to £25k was feasible but not more than that without security so got a mortgage at a lower rate for £40k.

The mortgage adviser can sort out the details but we chose a mortgage that allows unlimited overpayments and no early redemption charges so we can pay it off asap.

Dont underestimate the amount of time it will take until the estate is finalised.

My thoughts exactly. Not least because I've been burned in the past by accepting offers from 'chain free cash buyers' only for it turn out that their cash wasn't in the bank, but tied up in property in similar situations and didn't materialise in time so they had to get a mortgage after all and it fell through.

So until you know for certain the inheritance is gonna be in the bank, I'd be looking at ways to cover the full amount not just the shortfall (the latter must surely be doable by taking a bit of equity out of your current house via a small mortgage or somesuch).

We went to an (online) mortgage advisor back in 2021 about a short mortgage, and they said they couldn't recommend us as they had a relationship with the banks and they had to ensure the bank profited out of the deal or we'd be declined. We were told to look at a bridging loan which was extortionately expensive once we looked into the details.
Instead, we went back to the broker and got a 2 year fixed deal (clearly with much lower rates than now). The mortgage company made their profit, so they were happy.

I wouldn't imagine you'd be declined due to your age as long as you can show that you have a method to pay it off at the end of the term (which you will). Age only counts against you if you can't afford to pay the mortgage off in a specified time frame, but you will need a good broker to explain the circumstances.

Thanks all, probate has been granted and the solicitor is doing interim payments for the other assets that were realised ( shares savings etc ) this coming week and then when the house completes we have all signed the contracts etc (we were waiting on the buyers return from holiday) we have been told exchange completion will be the week after next and then completion we are currently waiting to agree a date based on them booking moving vans etc but this should be WC 7/08. This would give us the funds in 5 weeks time, is this really that different to selling in a chain? We have been very honest about our situation with the sellers of the property we want to offer on and they seem happy with the arrangement. It's basically a probate sale at their end too

No it wont necessarily give you the funds in 5 weeks time

As I said, in our case probate was granted finally in Feb giving us the right then to sell the property, it sold within weeks thankfully, we completed in April, very quick and done and dusted. It is not expected that HMRC will allow the estate (and all thats left now is the accounting from the house sale) to be settled until around September

As the house was the final thing to sort out, all the bank accounts had been settled earlier, HMRC now needs to be happy with the full accounts, the valuation of the property pre sale and the final sale price and all the ins and outs of that before confirming the conclusion of the estate.

Please dont underestimate this!!