There are strong indications that the UK purchase market has slowed down due to a combination of;
Political and tax uncertainty may be affecting some buyers
Economic and geopolitical uncertainty is encouraging caution
Fixed mortgage rates are coming under renewed upward pressure
Nationwide data shows a very price-sensitive market in London and the South East, with average time to exchange from sale agreed now being 132 days.
What does this mean?
As any agent will tell you, speed kills deals and extending timescales increases fall-throughs. We’ve seen an increasing number of bridging requests and clients looking to let out their current home.
Speeding up your property purchase in a slow market
Bridge to buy; Bridging finance is usually deemed a commitment by the new mortgage lender, so most won’t allow a bridge on the current and conventional mortgage on the new purchase. There is one that will; putting the borrowing on a mortgage saves the borrower circa 3% in interest costs and 2% in lender fees compared to a bridging loan.
Short-term mortgage finance: If affordability allows, there are lenders that will allow the borrowing on standard terms; the lowest we’ve seen is 0.35% over base with a £999 lender fee. This enables movers to buy without selling and with very low costs.
Let-to-buy; not a new concept, but a new angle is to put the current property under a limited company. This enables the property to be owned under a more tax-efficient structure and potentially prevents the new purchase from being liable for an SDLT surcharge.
When the new purchase is for a home, then emotion and family needs take control. As was the case with a solicitor we helped recently. The client was buying a new build property as her daughter was starting at a local school in September. We went through all the options available and ended up doing a bridging loan on her current main residence to release equity for the new purchase. The client was marketing her property throughout; the bridging enabled her to proceed whether or not she sold in time.
There are actually two different ways that bridging lenders total up the interest costs; most only offer retained interest, effectively you borrow the interest payments up front and pay interest on the interest for the duration of the loan. Rolled interest means you only pay interest on the amount owed.
Please feel free to contact us to discuss further.
MSP Financial Solutions
https://www.mspfinancial.co.uk/contact
020 8044 5693
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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