Key Post ICS Bridging Loans

Just trying to figure out costs.

New mortgage with different lender 300k

Legal fees €1291.50 incl VAT
Arrangement Fee 2% of Loan €6,000k
Exit Fee 1% of Loan 3,000
Total = 10,291.50

Are my calculations correct? Could anyone advise how much would be payble each month along with this from their website info?

Was kind of excited to see they are doing bridging loans as currently in a chain but think its too expensive especially if our sale falls through for any reason.

Anyone any thoughts?

Plus 3k a month interest while you have the bridging I.e. 1%

I agree with Gordon.

Bridging Loans, while typically short term, are far more risky for a lender, than a traditional homeloan.

The fact that most lenders stopped providing Bridging Loans years ago, says it all.

MrEarl said:

I agree with Gordon.

Bridging Loans, while typically short term, are far more risky for a lender, than a traditional homeloan.

The fact that most lenders stopped providing Bridging Loans years ago, says it all.

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Hear hear.

It’s a cost of doing business and should just be baked into the transaction costs. One would expect to pay 6% over six months. It’s the cost of a kitchen or a couple of bathrooms to not have to sell and then rent.

This is a great product.

When was it launched?

Of course, it has to be more expensive.

It would be great if another lender competed for the business and brought the price down.

Brendan

lmd said:

Was kind of excited to see they are doing bridging loans as currently in a chain but think its too expensive especially if our sale falls through for any reason.

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It's very hard to know whether to go for this or not. It would depend on how much you want the house.

If you go sale agreed to buy your dream home for €300k but your own house has not sold yet, then go for it.

If it takes you three months to sell your own house and buy the other house, then you will pay
Legal fees €1291.50 incl VAT
Arrangement Fee 2% of Loan €6,000k
Exit Fee 1% of Loan 3,000
3 months' interest €3,000
Total = 13,291.50

€13k is a lot of money, but is it material when buying and selling a house for around €300k? You might have been prepared to pay €350k for the new house.

Other people choose a quick sale of their own home at a lower price to enable them to avoid bridging.

Only you can decide if it's worth it or not.

You would need to be fairly sure of selling your own home quickly.

During the boom, people bought first and then put their house on the market. The market turned relatively quickly and people found that they could not sell their own home and ended up with two mortgages.

But if that happens, the fall in prices will probably be a bigger concern than the 1% a month bridging.

Interesting take by Joe Brennan in the Irish Times


The product – available for up to 18 months – is aimed at three groups: people trading down; investors seeking to purchase a buy-to-let (BTL) at auction; or people looking to renovate a BTL property.

...

It does not address a greater market need, according to many mortgage brokers, of helping borrowers who are looking to trade up.

The loan-to-income and loan-to-value mortgage limits brought in by the Central Bank in 2015 to save borrowers and lenders alike from themselves thankfully rule out the return of a boom-era practice of lenders offering people already carrying existing toppy mortgages an unsecured bridging loan to land their next home. (The deals typically included the borrower signing up to take out the mortgage on the second property with the bridging lender.)

And a follow-up letter saying that it's no good for trading down either!


Sir, – Your piece “Stopgap mortgages remain a bridge too far for Irish banks despite new ICS product” (Business, October 12th) about the so-called bridging loan launched recently by ICS Mortgages, owned by financial services company Dilosk, fails to highlight that this product is of no value to the empty nesters wishing to downsize precisely because it is not a short-term loan facility but a mortgage product bound by Central Bank of Ireland regulations which dictate that the borrowed sum is limited to four times the household income which for most in this category will be a pension.

This fact is absent from the advertising blurb on the ICS Mortgages website, which simply highlights the maximum sum allowed and the limit of 70 per cent loan to value.

I know this because I applied to use this product , sent all my financial details including a valuation of my home and was seeking to borrow approximately 50 per cent of the equity to purchase a smaller home.

I clearly demonstrated my ability to pay the interest from personal funds but was still only offered the maximum paltry sum of four times my pension income.

Apparently, ICS will only give you a mortgage secured on your current home.

So you current home cannot already have a mortgage.

So there are probably few enough people who are trading up who don't have a mortgage on their existing home.

Brendan