Avoid being stuck in a property chain


Being stuck in a property chain, where you have made an offer on a new home but are struggling to sell your current home, can be very stressful.

You may find yourself facing an ultimatum: proceed with the purchase or back out. In a situation like this, it can be helpful to seek advice early from suitably qualified professionals. Two possible solutions are as follows –

A Bridging Loan 

One option to avoid being stuck in a property chain is a bridging loan, which allows you to refinance your current home in order to purchase the next one.

After you sell your current home, you will be able to repay the loan.  Typically, you can finance up to a percentage of the combined value of both properties. For example, you may be able to finance up to 70% of the combined value of the house you are selling and the house you are buying.

Therefore, if you are selling a home for £200,000 and buying one for £300,000, you would be able to borrow up to £350,000. It is important to note that Bridging loan interest rates are often higher than for a standard mortgage, so they should be only seen as relatively short-term solutions.

Nevertheless, if you require more time at the end of the agreed term, you may be able to be extend it to include a further 12 months.

With a bridging loan, the amount you borrow at the start is the amount you will be required to pay at the end, however, you must pay the accrued interest of the loan during every month of the term.


Another option is to let out your current home, which can help ease the expense of having to service two mortgages.

In order to let out your current home, you may need permission from your current lender, and you may need to change the type of mortgage you have.

However, it can be a helpful solution if you are having a hard time selling your existing home in a sluggish housing market.

For further advice on how to structure your property purchase, please contact Frank Smith & Co Solicitors on 01242 801 748 or www.franksmithandco.com

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