Bridging loans: tread carefully

The Bank of England's rate cuts have brought traditionally-expensive bridging loans down to levels where many people might be tempted. But is it really a good idea to have two mortgages?

You've just found your perfect home after months of searching. Even better, you've managed to haggle it down to a bargain price because the seller is desperate to move. You're ready to do the deal. There's just one snag: you can't sell your old house. Now you're terrified that a cash buyer will come along and steal your dream home while you're still frantically polishing the for-sale board and dragging strangers off the street to show them all that extra space in your loft conversion.

One tempting solution is to use a bridging loan, where a bank lends you money to buy the new house before the old one is sold. This is a fairly obscure type of finance, but it seems to be getting a bit of publicity and is likely to get more as the property market remains stagnant and sellers get ever-more desperate.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.