mortage wont cover house purchase - bridging loan

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amberley

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Hi all,

My partner and I sold our first house in 2008 and put half of the proceeds from the sale into an investment which is maturing next year- it is a guaranteed return. The other half is in various bank/savings accounts. We have seen a house we would love to buy but the bank will not lend us enough to buy it even with the cash we have - we have no debts, pay rent every month, perfect credit rating, never missed a mortgage payment on our previous house. So we have a shortfall of about e50.

We would like to get a bridging loan or some other kind of one year loan that we can pay back in one year in one lump sum - no monthly repayments - from the investment when it matures.

I would be most grateful for suggestions of who to approach for this loan as from my own research I'm not getting anywhere. Any bridging loans Im aware of are for people in a selling/buying chain who need a loan for 3-6 months whereas our situation is different.

We have no other debts and are currently renting. Thank you.
 
Hi emeralds

They will only lend us a small amount because I'm self employed - I've had low earnings the last few years. My partner earns a good wage but it seems no amount of savings, cash or good credit history matters to the banks these days - its all about monthly earnings. Even though our monthly mortgage repayment would be less than half the amount we pay in rent currently! In fact there's only one bank that will consider us - not even the bank we had our previous mortgage with would consider us - even though we paid in full and overpaid every month on our previous mortgage and never missed a payment or took a payment holiday in the five years of that loan. It makes no sense - except to show that the banks are only barely lending - if at all.
 
Hi WindUp
We did initially use a broker about 2 years ago but he didn't have much success. So we decided to go it alone and are approved in principle now. Application for full approval is currently with the bank.
 
Have you looked at the possibility of redeeming your fixed term investment early?
Would the institution you have invested with be able to lend to you if it is secured against the investment? Even if it was a personal loan rather than a mortgage?
Are you a member of a credit union and have you considered borrowing from them?
 
Why did you tie your money up for five years when you might be in the market to buy a house?

Did an investment advisor sell this product to you? Did they not check its suitability?
 
I wonder if you signed over the investment to a bank or credit union would they loan you the money? But I guess if you have a new loan this will go against your current mortgage application.

How about waiting to buy for another year, until the investment matures?
 
Hi all thanks for your replies. To answer your queries one by one -

ontour - yes we have looked at redeeming the investment early and the bank wont let us do this. Thank you for the idea of using the investment against a loan with that bank - I hadn't considered this and will look into this option.

Brendan - we tied it up half our money for 3.5 years for a couple of reasons - we had a very bad experience on our first house (anti social behaviour) which took considerable time to get over. On the advice of a very persistent advisor we put the money into an investment which we weren't sure about and looking back we really didn't understand it - we deeply regret this now. Basically we got scared. At that time there was so much talk about "what will happen to our money if the Irish banks go bust". Even though we thought we knew what we were doing at the time, looking back we wouldn't do it again. And of course the investment has lost money.

Bronte - we are worried that if we wait much longer that we will be priced out of the market. And the house we are interested in is one in a million - very special. If there's any way we can get it, it would be a house for us to live in for many years to come.

Thank you all for your suggestions - if anyone else can help please drop a line.
 
Amberley. I do not know how much is involved in the shortfall and I note that you do not want monthly repayments. However I would suggest that you take out a SVR mortgage for up to 20 years depending on your ages. I do not know how much your earnings are to support a mortgage. If you purchase the house you will be saving on rent.
You will have some additional costs in getting a mortgage as opposed to getting a bridging loan but you you will probably have the mortgage at a lower interest rate.
When you redeem your investment you can pay the mortgage off in a lump sum without a penalty. Just think of the mortgage repayments as rent payments in the meantime.
I presume that what I have stated has been put to you before but just in case it has not I have put in my opinion. I also see you have something waiting for approval.
Good luck to you
 
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