A property chain is three or more people who are linked together buying or selling a home. Simply put, it is a series of homes which are all being sold/bought at the same time.
Unless you’re a first-time buyer, it’s likely that any house purchase you make will be a link in a chain.
With the housing market experiencing the busiest start to the year since 2016, many are finding they can snap up new homes within a matter of weeks.
However, there is a risk that with demand outpacing supply and affordability squeezing buying prospects – everything could slow considerably – increasing the risk of the entire chain of property transactions falling through.
Even a small hiccup in the buying process can trigger a major domino effect that could scupper the whole deal, wasting huge amounts of time and money and causing unnecessary stress and heartache for everyone involved.
So, if you’re stuck in a slow chain, there are a few options which would allow you to take control in preventing your home purchase from falling through. Here are my tips…
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Complete your sale and rent
If you’re stuck in a complex chain and keep being let down by your seller’s problematic surveys, finance issues or clashing of 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.
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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, 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 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. To add, a Bridging loan to Chain Break is ideal when the homeowner has built up significant equity in their home, such as older borrowers with little or no mortgage. Downsizers are perfect.
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Whatever you choose, get sound financial advice
Speaking with a professional or specialist financial adviser is the best way to carefully explore all the options available and find 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.
Scott Clay is distribution development manager at specialist lender Together
