Bridging a Negative Equity Trade up

[MrsMloc]

Hi All,
Im wondering if anyone has any experience in the below scenario:
Approved for a negative equity trade up. Negative equity of 50k approx.
Have Sale Agreed on the negative equity property however the house we are buying is a new build which wont be ready for approx. 1yr.
We cant expect the buyers of the current property to wait a year, and we obviously don't want to risk losing the sale.
Will the banks do some sort of a bridging loan to bridge the gap of the negative equity amount until such time that we complete on our new house?

Thanks

 

[RedOnion]

You'll have to check with your bank, but they should have something in place for this. The bank need to give their agreement to sell the current house, and part of that sets out an agreement for repayment of the shortfall amount.

There is generally a condition that the new mortgage must be drawn down within 1 year of the old one being repaid, especially if you have a tracker.

It's very important that you pay the agreed shortfall repayments as missing them could lead to a refusal to issue new mortgage when the time comes.

 

[Brendan Burgess]

Why are you selling your existing property now if the other property won't be ready for a year?

Too much can go wrong. Loan approval usually lasts only 6 months. Your circumstances might change e.g. a change of job or illness and they refuse you a mortgage.

You should not sell until you are ready to buy.

Brendan