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Thread: Short-term borrowing to buy a house....advice needed please.

  1. #1
    Grand Master
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    Short-term borrowing to buy a house....advice needed please.

    I'm going to see a bungalow tomorrow with a view to buying. The owner's after a quick sale and ideally I`d like to buy it before my own house sells. I`m sure my house will sell easily within 6 months, even taking account of the time of year, so I`d be looking to borrow money short-term. If absolutely necessary I could cash savings/investments but I`d prefer not to. The bungalow is worth a similar figure to my current house so Id end up financially in the same position give or take a few .

    If it comes off I`ll be looking to raise around 100K and finance the rest myself. What's the best way to do this? Selling a few watches plus my MGB won't get anywhere near........a silly idea that I wouldn't even consider.

    It's a long time since I`ve approached a bank or building society about borrowing, but I guess that's what I'll have to do.

    Any advice would be a appreciated, feel free to drop me a PM if that's easier.

  2. #2
    Journeyman
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    Good evening.

    A quick but expensive solution may be a bridging loan.

    Have you considered remortgaging your current property in order to raise the finance?

    Sent from my CLT-L09 using Tapatalk

  3. #3
    Grand Master
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    Haven`t spoken to banks or anyone yet, just trying to sound out the options. Around 100K would suffice for approx. 6 months, I accept there will be a cost involved but I`m trying to minimise cashing in investments and having to re-invest in the near future when the dust has settled.

    Current property is worth around 260K, the one I`m buying is a tad cheaper but needs money putting in, no mortgage on my current house so it's all equity. No idea how much a bridging loan would cost, I could fill in the on-line applications but I`m loathe to do so at this stage, I like to know the (approximate) answers before I ask questions where money's concerned.

    Decent bungalows are hard to find in my area, this one ticks lots of boxes so I`d hate to miss it. Buying outright without selling puts me in a strong position to get a good deal, seller is v. keen to sell, so I can soak up a bit of financial pain to make it happen.

  4. #4
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    A bridging loan will be the answer I expect. I would be wary of over extending yourself with what's going on at the minute.

  5. #5
    Definitely a bridging loan - shouldn't be overly expensive, or remortgage and have one of the properties owned outright. The bank might well be helpful - one of my clients' finance directors was steered towards a bridging loan by the bank and that worked out the cheapest option for him.
    It's just a matter of time...

  6. #6
    Grand Master
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    Any ideas how much bridging finance would cost? I was hoping someone had been down the same path recently.

  7. #7
    Master
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    Quote Originally Posted by walkerwek1958 View Post
    Current property is worth around 260K, the one I`m buying is a tad cheaper but needs money putting in, no mortgage on my current house so it's all equity. No idea how much a bridging loan would cost, I could fill in the on-line applications but I`m loathe to do so at this stage, I like to know the (approximate) answers before I ask questions where money's concerned.
    I don't have shares in Martin Lewis (!) but his site usually has some good pointers:

    https://www.moneysavingexpert.com/remortgaging/

    EDIT: Ironically, the fact that you don't currently have a mortgage might actually make it slightly more difficult! Have you got credit cards, etc., so that you actually have a borrowing credit history (even if you repay every month)?

    EDIT AGAIN: He actually suggests a mortgage broker: https://www.moneysavingexpert.com/mo...rtgage-brokers
    Last edited by David_D; 9th October 2019 at 22:01.

  8. #8
    Quote Originally Posted by walkerwek1958 View Post
    Haven`t spoken to banks or anyone yet, just trying to sound out the options. Around 100K would suffice for approx. 6 months, I accept there will be a cost involved but I`m trying to minimise cashing in investments and having to re-invest in the near future when the dust has settled.

    Current property is worth around 260K, the one I`m buying is a tad cheaper but needs money putting in, no mortgage on my current house so it's all equity. No idea how much a bridging loan would cost, I could fill in the on-line applications but I`m loathe to do so at this stage, I like to know the (approximate) answers before I ask questions where money's concerned.

    Decent bungalows are hard to find in my area, this one ticks lots of boxes so I`d hate to miss it. Buying outright without selling puts me in a strong position to get a good deal, seller is v. keen to sell, so I can soak up a bit of financial pain to make it happen.
    Estimated cost will be 1% per month. And a minimum 12 month loan period. Plus valuation, arrangement fees and legals. It is quite expensive but go to the right ones and it will be much quicker than a bank. Also I assume you you are at retirement stage of life so banks probably wont be interested where bridging companies wont be concerned by that


    Sent from my iPhone using TZ-UK mobile app

  9. #9
    Master
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    Random Google find:

    https://www.furnessbs.co.uk/mortgages/products/discount/4-24-for-2-years-short-term-lending


    4.24% pa. 1,500 fee but "A free legal and valuation package" and "no early repayment charge ... and no restriction on overpayments".

  10. #10
    Grand Master Chris_in_the_UK's Avatar
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    Quote Originally Posted by walkerwek1958 View Post
    Any ideas how much bridging finance would cost? I was hoping someone had been down the same path recently.
    Speak to Burnsey at the GTG, seriously.
    When you look long into an abyss, the abyss looks long into you.........

  11. #11
    Its late so I may be missing something. However, as your current home in unencumbered why dont you buy the new house with a standard home loan with no early redemption fees. That should be cheaper than a bridging loan.

    Id also recommend having a chat with a good broker (they do exist!) and they should be able to advise you on the best lender and product for your needs.

  12. #12
    Grand Master
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    Quote Originally Posted by Chris_in_the_UK View Post
    Speak to Burnsey at the GTG, seriously.
    Thanks Chris, that had crossed my mind

    Thanks to all who’ve taken the time to offer comments, it’s appreciated.

  13. #13
    Master jukeboxs's Avatar
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    I'd give London & Country a call. I've used them for my last few remortgages and they were excellent.

  14. #14
    Master wileeeeeey's Avatar
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    I don't think this is the market to be taking out a bridging loan on the assumption your house will sell in 6 months. The market and the economic outlook are both looking incredibly bleak right now. Offer them a non refundable deposit or even exchange on 5% with a long stop completion 12 months out which can be brought forward by mutual consent. Seller wants a quick sale so might not work but depending on their situation a non refundable deposit by you could work.

    I just sold my house 3 weeks ago and thank God it's gone. I was petrified they would pull out due to Brexit and the constant bad headlines for the current economy.

  15. #15
    Grand Master number2's Avatar
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    It's 'the gift that keeps on giving'.
    "Once is happenstance. Twice is coincidence. The third time it's enemy action."

  16. #16
    Craftsman
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    Id look at either borrowing against your own house and give the reason as buying a holiday home or buy the new place on a BTL loan. They wont ever check that it never got let out.

    But in the current market, be prepared to be stuck with two properties for a while or being forced to sell at a greatly reduced price. For that reason, I wouldnt consider bridging loans.

  17. #17
    Master
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    Quote Originally Posted by broxie View Post
    Id look at either borrowing against your own house and give the reason as buying a holiday home or buy the new place on a BTL loan. They wont ever check that it never got let out.

    But in the current market, be prepared to be stuck with two properties for a while or being forced to sell at a greatly reduced price. For that reason, I wouldnt consider bridging loans.
    Not the worst idea but to the OP please be careful, you risk becoming the seller chasing a falling market/trying to catch a knife.

  18. #18
    Try Red Steve of this parish?
    I believe hes a mortgage advisor.
    Damn nice bloke too.

  19. #19
    Master Kirk280's Avatar
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    Quote Originally Posted by Chris_in_the_UK View Post
    Speak to Burnsey at the GTG, seriously.
    Indeed. He might pawn his new M5 and give you the cash!!

  20. #20
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    I had a very similar situation a year ago. Although my current property was mortgaged. Assuming you do have a regular income a mortgage on your current property will be the easiest and cheapest option and then as you say buy the new one cash to put you in a strong negotiating position.

    As mentioned above. Take a variable which you can pay off whenever the current house sells with no penalty.

    I would avoid bridging loan in your situation. You just don't need it...it is usually for those with no choice.

    If you need a good and free broker let me know by PM. I have used him for years and he always gets it done no matter how complex.

    Sent from my SM-N950F using Tapatalk

  21. #21
    You'll have to find cash for the higher rate of stamp duty as you'll owning two houses, though you'll be able to claim it back if yours sells within 2(?) years.

  22. #22
    Grand Master
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    I’m not noted for ill-founded optimism but I don’t see the house market in my part of West Yorkshire suffering significantly (if at all) owing to the brexit debacle. Normanton is a cheap area for housing with plenty of jobs, albeit at fairly modest pay, on the numerous local industrial estates. A decent sized modern 4 bed detached sells easily for between 230k and 260k depending on size and exact location, but once you go over 300k the houses sell more slowly. Prices have strengthened over the past 12 months, houses on my estate ( a large fairly recent development ) sell quickly unless the house is in poor condition or the buyer asks too much.

    The area’s a pleasant but down to earth former mining town at the side of the M62, proximity to the motorway has been the lifeblood of the area over the past 30 years, lots of new housing has been built in this period too. I think we’re in a good position regarding a downturn in the market, even during the post credit- crisis slump the prices around here held up well.

    Clearly, there’s a risk involved in owning two properties in a stagnant market, but I could always resort to renting my house out, not my preferred option but worth considering.

    Food for thought!.......thanks again for all the comments.

  23. #23
    Craftsman
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    At this level of debt just go for a standard purchase mortgage with no redemption penalties and no/low arrangement fee.

    bridging has quite a few extra costs and often a minimum term. With the right lender the loan shouldn't take too long to arrange.

  24. #24
    Grand Master
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    Had a look around the property and it's ticking the boxes, definitely a 'project' if we buy, needs a fair amount of work, can`t see many watches getting fixed for a few months if it goes ahead........might be a few of mine going on SC if I end up scraping the piggy bank

    The bungalow's ripe for extending and turning into what I`d really like, at 61 now's the time to do it all rather than wait till we're both too old.
    Last edited by walkerwek1958; 10th October 2019 at 21:36.

  25. #25
    Master
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    Quote Originally Posted by kace View Post
    You'll have to find cash for the higher rate of stamp duty as you'll owning two houses, though you'll be able to claim it back if yours sells within 2(?) years.
    Its 3 years apparently- I'm just buying my second home (due to marriage split) the stamp duty is around 5.5k (on 170K)- don't bank on a smooth sale my purchase has been going for 5 months now - its only myself and the seller in the chain- I have no house to sell and she's going into a retirement home.
    Good luck

  26. #26
    Master
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    A Bridging loan may be the way to go, but there might be other options which you should explore first, that may be quite a bit cheaper. Mortgaging your own house (subject to income), let to buy/buy to let, loans over both properties etc. Speak to a good independent mortgage adviser as it may well save you a lot of money, but bridging will be easy if thats the only viable option. If you have any questions feel free to ask.

  27. #27
    Master mr noble's Avatar
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    Surprised no one has mentioned a Let to Buy mortgage yet. (Ok, I’ve just noticed Dev did above!)

    Pretty much exactly what you’re looking for.

    You may even decide to actually let your “old” house out after you’ve moved into the new one.


    https://mortgageadvisers.which.co.uk...me/let-to-buy/

  28. #28
    Craftsman
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    The housing market seems pretty volatile, we just sold 2 houses.
    1 Shared ownership sold before it hit the estate agents (where else can you get a 3 bedroom house in the home counties for 77k).
    2 A village located bungalow took 9 months to sell and we knocked 35k off the asking price to sell it.

    The place we bought was 'of interest' to 4 or 5 people, we bought because we sold first. AFAIK none of the other people interested have yet sold as there are 2 more of the same house types on the estate and both are still available (the price is pretty keen too).

    It seems to me, and I'm in no way an expert, to be a buyers market so you either need to have time to wait for the perfect buyer willing to pay your price or the financial flexibility to lower the price to be more attractive to buyers.

  29. #29
    Craftsman
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    Quote Originally Posted by mr noble View Post
    Surprised no one has mentioned a Let to Buy mortgage yet. (Ok, Ive just noticed Dev did above!)
    And I did (post #16).

  30. #30
    Master mr noble's Avatar
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    Quote Originally Posted by broxie View Post
    And I did (post #16).
    Not wanting to be pernickety, but post 16 referred to a BTL loan or raising finance on his own house. Neither works quite the same as a Let to Buy mortgage.

    The OPs best bet in his situation Id say.



    From the link https://www.lovemoney.com/news/20878...-buy-mortgages


    Let-to-buy is where a mortgage borrower keeps hold of their existing home and rents it out to tenants, and then buys a new home for themselves and their family to live in.

    It is a bit like an upside down version of buy-to-let, but with buy-to-let you purchase a property with the intention of renting it out. With let-to-buy, you purchase a property with the intention of moving into it, and you let your existing home to tenants.

  31. #31
    Master
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    A few years back now so it may have changed but it was during the credit crunch 2010/11, we where in a similar situation of money tied up and needed to move fast to buy the house we now live in. No mortgage on the other house and the ability to repay the 110k within 6-12 months. Someone pointed me in the direction of a mortgage broker who ran a few options and concluded remortgaging my existing property was the fastest and cheapest method from memory it cost me circa 4K in arrangement fees and interest over the 14months until I’d repaid everything. It would be well worth speaking to an advisor or broker and asking them to run a few options, the caveat I’d give is get one who’s recommend I’ve heard horror stories about some ours sadly retired or I wouldn’t hesitate to put you in touch. As I said all this was during the credit crunch and I’m self employed so I was expecting an absolute nightmare but everything was pretty straight forward and much faster than I expected.

    Edit money was repaid within 12 months it took 2 months for the sale etc to go through

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