Briding loan - Do I need to allow for stamp duty?

Hi All:

I have searched the Bridging loan posts and although some are quite helpful I didnt find anything that answers my query.....so here goes.

I have not gone sale agreed on my house (two false starts and 3 mths on market). The vendors for the house we really want has stated that they want contracts signed on tuesday and closing on 7th oct 06 no compromise (which I fully understand).

Need a bridging loan but not sure how much?? Obviously we need the difference between what we have and what we need?? But do we need to pay stamp duty immediately on the day of the close?? we were planning on paying the stamp duty out of equity release when we sold our currently home but as this wont happen on time. It will mean adding anothe 50k onto the bridging loan........which I would rather not do?

Essentially what I am asking is: Is stamp duty payable immediately or do solicitors usual ensure it is paid at closing as it it more convenient that having to 'revisit' and chase payment in a number of weeks/mths later??

Many thanks,
S

PS: Just noticed what I called the post and dont know how to change it Ooops!

Hi

You should consult your solicitor on this. My understanding is that most solicitors will want the stamp duty paid on closing. There is a period (i think 30 days ) after closing that the stamp duty must be paid by.

Thanks steelblue.....will see what my solicitor will allow me to do!!

The stamp duty should be paid on the closing date i.e. you do need to allow for it in your bridging. The reasons are (a) your lender will be relying on your solicitor's undertaking that they are in funds to register the purchase deed and mortgage deed (b) even though there is a grace period of c. 30 days to stamp the deeds after closing, the deeds have to be stamped during that period to avoid penalties. The deeds cannot be registered until they are stamped.

I have heard of solicitors releasing funds but not seeking the stamp duty but I think that is very foolish - if the client subsequently cannot come up with the funds for the stamp duty , they are in deep doo doo.

mf

Is your income sufficient to cover your existing mortgage, the new mortgage and bridging finance for the shortfall/stamp duty? Most lenders are reluctant to offer open bridging which, by definition, has no set term.

Sarah

www.rea.ie

We have just goine through bridging ourselves. In buying a new house you will need enough finance to cover the following outlay:

Price + Stamp duty

When bridging you will typically have the following sources of finance:
Deposit
New mortgage
Bridging


If you include your existing mortgage that adds up to 3 big loans - if you have pay all 3 at once it's a serious cash crunch ( in our case my entire pre-tax salary!!). We found the bank was able to faciliate us in the following way. Firstly the bridging loan is interest only with a single lump-sum repayment - we had 6 months within which to make this replayment. Secondly on drawing down our new mortgage we were able to request a 3 month moratorium on payments. Thankfully the bridging period only lasted 5 weeks - it cost us €2000 in interest. You also need life cover on the bridging finance.

Hi All:

Thanks for your replies.

Lissard glad to hear that you have been thru' the same recently and survived! Its a nightmare.

The bank (BOI) will only open bridge 70% which still leaves me short about 100k..........which I have no idea how I am going to fund!!!!

back to the drawing board and the abacus!

lissard said:

Secondly on drawing down our new mortgage we were able to request a 3 month moratorium on payments.

Click to expand...

Hi Lissard,

How did you negotiate the 3 mth moratorium on payments? Was this part of the original loan offer/package or did you negotiate it after you arranged bridging.

I am with BOI and I think I will see if they have a similar deal......Do you mind me asking what bank you are with?

Apologies about the delay in replying. We've our mortgage with AIB - they offered the moratorium without me prompting them. Apparently you can request a moratorium 2-3 times over the term of the mortgage.