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The logic behind breaking your house's chain.

03 Dec 2019 | 3 min

Unless you’re a first-time buyer, it’s likely that any house purchase will be part of a chain. 

That’s fine if everything goes to plan; but just one hiccup can trigger a major domino effect that could scupper the whole process, wasting huge amounts of time and money, and causing unnecessary stress and heartache for everyone involved.

While a chain might just be two people, it could be many more, which increases complexity and the odds of something going wrong. So if you’re stuck in a slow chain, it might be time to take control and deliberately break the chain yourself. Here's how (and why).

Option 1: Complete your sale and rent

If you’re stuck in a complex chain and keep having purchases scuppered by other people’s problematic surveys, finance issues and clashing timings, you might want to think about completing the sale on your current home and moving in to rented accommodation. There are lots of benefits to this.

First, you’ll have the cash available to move quickly when you do find the home of your dreams. Plus, you’ll be an attractive prospect when you put in an offer, as you’re ready to move when the vendor is.

Of course, moving into rented accommodation does have its downsides – you’ll have to pack and unpack your life not once, but twice, plus rent can be more expensive than mortgage repayments. But it could give you some breathing space and take some of the stress out of securing your forever home.

Just remember though, even though you’ve got nothing to sell, you could still be part of a chain - albeit at the bottom.

Option 2: Use a bridging loan to secure your dream home

If you’re waiting for your buyer to come through and fear you may lose your new home due to issues with timings, you could try a bridging loan. These secured loans typically last up to 12 months, and allow you to borrow the money you need to buy your new home, while waiting for some other money – namely the equity from the sale of your current home – to come in.

There are no monthly repayments on Together Bridging loans secured being used in this way, so you won't end up paying for two mortgages at the same time. Instead, interest is charged monthly and 'rolled up' to be repaid in a lump sum, with the initial loan and any fees, as soon as you're able.

If you do go with this option, it’s may be wise to wait until you've exchanged contracts before you sign on the dotted line for your bridging loan. We say this because if you get gazumped at the last minute, you’ll still have a loan to pay off.

Option 3: Rent out your old home

If the people you’re buying from are keen to move but your buyer is dragging their heels, you could consider keeping it and converting it to a rental. This will, of course, need the agreement of yuor existing mortgage provider, and will mean taking out a new mortgage on your new home, rather than 'porting' your mortgage to the new property. Your mortgage provider can explain any fees, interest and charges associated with doing it this way; it's worth doing your own research to find out how becoming a landlord would impact your income tax obligations, as recent changes have been introduced with the intention of making renting out property less attractive.

Whatever you choose, get sound financial advice

This guide is intended as a general overview, while a financial adviser will be able to explore all the options available and suggest the right one for you. Every individual’s circumstances are different and there will always be an element of risk involved – so make sure you consider all your options, and go into things with your eyes open.

Articles on our website are designed to be useful for our customers, and potential customers. A variety of different topics are covered, touching on legal, taxation, financial, and practical issues. However, we offer no warranty or assurance that the content is accurate in all respects, and you should not therefore act in reliance on any of the information presented here. We would always recommend that you consult with qualified professionals with specific knowledge of your circumstances before proceeding (for example: a solicitor, surveyor or accountant, as the case may be).

Lending decisions are subject to an affordability/creditworthiness assessment.

Any property used as security, including your home, may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

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