Bridging loans, what to be careful of

If you are getting the loan and then giving the money to your son for the purchase, you will have to go through the anti money laundering checks. These involve authentication of your identity, paperwork regarding the funds and their transfer.
You may need to consult a Financial/ legal advisor, if you haven’t already.

If you have solid equity in your home and second home why cant you just guarantee your sons house purchase.

That aside you both need to be realistic about the sale price of your properties any interest will need to be paid on both properties until cash comes in. If the son's new property needs work, is it liveable in the meantime, are they prepared to move in?
Be very careful, building work can take longer and cost a lot more that most think, do not wear rose coloured spectacles when you look at your sons plans

My daughter and family wanted to move they also chose houses that needed work and wanted help to buy them, I rejected the first 2 they were wrecks needed a lot of work before they moved in. The third needed work but was liveable, they moved in, it took 10 yrs to complete but they made lot of money when they sold it

Thanks for helpful advice, have just got the news that the seller has put the house on the market for a highter price!!
With legal and broker fees+ auction deposit of £13000, we couldn't get the finances together in time so lost deposit, its been an expensive exercise with little to show. Been very stressful. What lessons to learn?

A serious thread and some good advice.

About 4 years ago, a bridging loan was something a friend was considering. As I was in Newcastle, I nipped into Virgin on Northumberland Street to make enquiries. I was met with a blank stare from the young woman and man at the desk, so repeated that I was looking for any information on terms and conditions for a bridging loan.

Eventually the young man spoke and said they didn’t do loans for bridges, just for residential properties!

I kid you not!

Sorry that it all came to nothing. Buying at auction isn’t for the faint hearted. It always looks so easy on the TV.

I've always been a risk taker but always with a strong position, if it goes wrong and costs more it's still OK. To this end I learned to add 50% to any project cost if it's still viable then go ahead, often actual cost has got close to that.
Advising others or helping family always err on the cautious side, in the current housing market sit on your hands it could get worse.

We've had 2 bridging loans in the past because we didn't want to lose the house we'd set our hearts on whilst waiting to sell.
It is stressful, and a good way to lose weight. I called it the "bridging loan diet"!

We had to take one out as DH was forced to move through work and the kids needed to start their new school, but although we had found a house, we could not sell our own. New area was much more expensive. It was the time late '80s when the market collapsed, put on the market for £165k and eventually sold 18 months later for £114k. DH's company (Home Office) initially covered the loan, but we had to reapply every 3 months with no guarantee they would renew. Incredibly stressful, and fortunately we had a supportive MP who was fighting our corner. 'Bridging loan diet' is absolutely right!

Struthruth

Thanks for helpful advice, have just got the news that the seller has put the house on the market for a highter price!!
With legal and broker fees+ auction deposit of £13000, we couldn't get the finances together in time so lost deposit, its been an expensive exercise with little to show. Been very stressful. What lessons to learn?

Really nasty of the seller to do this, and probably not a wise move in view of the current market. If your son still intends to sell his house it may be that the seller will be amenable by the time he has his sale in place. This happened to us when my daughter lost a flat to another buyer. He was supposedly a cash buyer but in fact was not, so the seller (a neighbour) came back to me and my daughter got the flat. It's always worth keeping in touch with the seller's agent.

Georgesgran

A serious thread and some good advice.

About 4 years ago, a bridging loan was something a friend was considering. As I was in Newcastle, I nipped into Virgin on Northumberland Street to make enquiries. I was met with a blank stare from the young woman and man at the desk, so repeated that I was looking for any information on terms and conditions for a bridging loan.

Eventually the young man spoke and said they didn’t do loans for bridges, just for residential properties!

I kid you not!

I can believe that these days.