Short Term Finance Options
Answered on 11 February 2019 by Nick Morrey
We want to borrow more money to purchase a new property that is worth more than our current one (owned outright). We haven’t sold it yet but want to buy quickly – is this complicated?
As you own your property outright it should be possible to raise up to 75% of its value as a short-term loan. This would give you the money towards your new purchase. You can expect to pay around 1.50% per month as well as a 2% arrangement fee.
These costs would be added to the loan and repaid on the sale of your house. Whilst this may seem expensive it could mean the difference between successfully purchasing the house you want and losing it whilst you wait for yours to sell.
However, this may not give you sufficient funds to cover stamp duty and other associated costs of purchase and it might be that you would be better arranging a mortgage on the new property. If you choose a mortgage with no early redemption penalties, then you would be able to redeem it once your own house is sold. It is likely that this would be a cheaper alternative.
Ask The Mortgage Experts answers are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them. We recommend you seek professional advice with regard to any of these topics where appropriate.