Property chains can grind to a halt for a long list of reasons. Mortgage applications are rejected, buyers fall into economic hardship and sellers simply change their minds at the worst possible moment.
Irrespective of the cause of a stalled property chain, the frustration felt by those affected remains the same. Through no fault of your own, you suddenly find yourself in a position where you are unable to complete your move.
The question is – is there anything you can realistically do to get things moving once again? With such huge competition on the housing market, what can prospective homebuyers do to mitigate the risks associated with property chains?
Where property chains grind to a halt, there are three options available to once again set things in motion:
1. Rent Out Your Current Home and Move
One option to complete the purchase of your next home before selling your current property is to consider let-to-buy. This is where instead of selling your current home; you let it out to tenants and in doing so, generate the monthly rent payments needed to cover the subsequent mortgage payments on your next home.
This can be a great long-term solution for those looking to maintain ownership of both properties. If you own your home in full and can generate enough rental revenues to cover the payments on a new mortgage, let-to-buy is worth considering, it is often much easier to find eligible tenants than to find a buyer for your home, you could move into your dream property much quicker.
2. Use a Bridging Loan to ‘Bridge’ the Gap Between Buying and Selling
Alternatively, you could take out a bridging loan to enable you to opt out of the property chain in its entirety. Bridging finance is a short-term secured loan, which can be taken out against the equity you have tied up in your current home. These funds can then be used to purchase your next home, affording you all the privileges of a cash buyer.
Bridging loans are designed to be repaid a few months after being issued and are typically charged at a rate of around 0.5%. This translates to all the time you need to sell your previous home for its full market value, without having to watch your dream home slip through your fingertips.
You borrow against your current home, you buy your next home, you sell your previous property and you repay the loan in full when the transaction is complete; a fantastic way to escape the trappings of the conventional property chain, and to get the best possible price for your home.
3. Consult with an Experienced Broker or Lender
Bridging finance may not be the only product available to suit your needs. There may be other types of specialist secured loans available to help you get your move back on track.
The available options will be determined by a variety of factors – the amount of equity you have tied up in your home, how much you intend to spend on your next home, how quickly you would like to repay the balance, whether you intend to retain ownership of both properties and so on.
Speaking with an experienced broker or lender is the best way to build a detailed overview of the options available. At which point, you will be in a much better position to choose a flexible and affordable product that suits your objectives.
For more information or to discuss the benefits of bridging finance in more detail, contact a member of the team at Bridgingloans.co.uk today.
