Can I get a loan to bridge the gap between sale of my existing and the purchase of a new property?

Posted on 27 May 2016


"I have my property on the market for £230,000 and hope to sell it for £210,000. I am then looking to purchase  a house with my son in the region of £250,000. My son can contribute up to £60,000. We have looked at properties and would like to buy one before  my property is sold so we can move during the summer. Can you suggest a way we could this? I do not want to put  my present home at risk and couldn't afford a mortgage on state pension."

Thanks for your question via the Ask the Expert section of the John Charcol website. Although not knowing your full financial position, it would appear, based on the information you have supplied that this something we can help you to explore in the future.

It is possible to raise funds using your existing property by arranging what is known as bridging finance. This is a short term loan secured on your existing property, which literally bridges the gap between the purchase of a new property and the sale of your existing one.  Due to its short term nature of the loan and having a clear exit strategy, your pension income should not be a major problem.

With the circumstances outlined,  it should be relatively straight forward to arrange  for instance a 12 month  bridging loan  to be taken out using your existing home as collateral, with the loan being repaid upon its sale. As with any purchase it's important to remember that you will also need additional funds to cover other costs such as stamp duty, arrangement fees and solicitor costs.

If you are not comfortable with bridging finance, then I suggest you await until you have secured a buyer for your current home and complete the transaction for the new purchase simultaneously.

I suggest that the next step would be to discuss your enquiry in more detail, if you would like to do this then please let me know and I'll arrange for one of our consultants to contact you.

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Answers provided in response to Ask the experts 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.