Bridging type loan to complete renovations on downsizing house.

[Desperate]

We are a couple in our sixties planning retirement with large suburban house denested of children, unfortunately with smallish tracker mortgage with KBC for another 11 years due to remortgage for business needs. The LTV is about 20% leaving about 80% equity.

We bought a derelict artisan cottage and secured Planning permission to extend and modernise and got quotes fro builders for the works.

We were about €150,000 short to finish the job or just over 25% of finished value of the house.

We had assumed (wrongly) that KBC would provide a Bridging loan to complete the works and then sell our family home and repay the loss making Tracker mortgage and move to our smaller house with lower outgoings and no mortgage.

We seem to have discovered that a short term loan to be paid off by selling the first property is no longer offered by any Irish bank.

We could afford monthly interest payments and this would be cheaper and less stressful than renting.

I am not sure why this?

Before anyone asks we have no other debt and i would imagine a perfect credit record.

It means that we will have to sell our existing house and rent in this very difficult Dublin market with 2 dogs and a 3 cats.

 

[Brendan Burgess]

I am not sure why this?

I don't understand this either. It makes absolutely no sense that a lender would not provide you with a €150k loan secured on the new property and a second charge on the family home. But Irish banking is dysfunctional.

Have you tried Pepper? They seem to be prepared to make loans which other banks would not make.

Another option you could consider, but it's messy. Trade down from your present home to a smaller home. Port your tracker mortgage and pay an extra 1% interest. This would release the €150k cash you need.

Then after two years, sell your new home or keep it as an investment.

Brendan

 

[Desperate]

We have tried Pepper. No go on bridging. At first it seemed they might give us a buy to let mortgage but because loans must be paid off by age seventy (5years) they turned this down.
We have been told we could get a business loan if we transferred the property into a "SPV" or limited company which would expose us to tax problems.

 

[Monbretia]

It's obviously age that is stopping you getting a brand new mortgage on the new property as Brendan suggested, as the loan will have such a short term the income required would be astronomical as it would be underwritten under normal lending criteria. Bridging just doesn't really exist anymore and hasn't for quite a while, I'm afraid it's a difficult one!