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Mortgage/Bridging Finance - help!

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  • 26-08-2013 11:03am
    #1
    skmck
    Registered Users Posts: 66 ✭✭


    Hi all,

    First of all excuse my ignorance when it comes to mortgages/bridging finance, etc but was wondering if anyone could explain the following:

    I am in the process of purchasing a house in a new development of 15houses. Unfortunately the developer ran out of funds and was unable to complete the houses and is selling them in their current state (I've had a builder in and there is approx. €50,000 worth of work to be done to bring to a builders finish). The house is costing €80,000 and I have been approved for a mortgage of €110,000 with AIB.

    AIB are seeing this as a self build and have said that they will give me the mortgage in 2stages - €41,000 to purchase the property and the balance on completion. Now I'm fortunate that I have savings to cover the balance of the purchase price but when I originally applied for the mortgage I was told that I would be able to draw down the mortgage in stages of completion but now they are telling me that I'll only get the balance of the funds on completion!

    Therefore I've heard about bridging finance but I don't understand how it works? Do I have to apply for this? Is there a long drawn out process? Can I just go with the bank that I am getting the mortgage with? Will a bank give me a bridging loan if I have used all my savings to purchase the house?

    I would really appreciate if someone could help me out here as I am totally clueless as to how this works!

    Thanks a mill!


Comments

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    #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,712 Mod ✭✭✭✭Henry Ford III


    Ask AIB. They should be able do that easily.


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    #3
    skmck
    Registered Users Posts: 66 ✭✭skmck


    Thanks Henry Ford III :)


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    #4
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    Go back to AIB - if they are treating this as a self build they should be offering you stage payments as the build progresses certified by a qualified Architect/Engineer who will be supervising the work. This is normal lending practice for self builds.

    They will expect you to put your own money in up front but there should be no problem in drawing down payment in stages.


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