Cross-charging mortgages introduced

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Some lenders have launched cross-charging mortgages as a bridging finance option. A cross-charging mortgage enables homeowners to borrow on two properties. This means that people can take out a bridging loan both on the house they are selling as well as the house that they are buying. After a long term mortgage has been arranged, it can be used to repay the cross-bridging loan.

Interest rates on cross-charging mortgages are not high and can be found for around 0.65% a month. Loan values can range from £10,000 at £1 million. Most lenders arrange cross-charging mortgages for up to 75% of the property’s’ value.

An example of where cross-charging is useful is in the situation where a property that a buyer wants to purchase is devalued because it needs money spending on remedial work.

These mortgages are available from mortgage brokers who will be able to assess whether this type of finance product is suitable for a homeowner’s circumstances.

Cross charging offers flexibility and uses equity from both the property being sold and the one being purchased. Cross-charging mortgages are not widely available yet. Lenders are trialling the effectiveness of these loans. The mortgage market is competitive, and if a few lenders adopt cross-charging, others will probably follow in order to compete.

Cross-charging can be used by private individuals when buying and selling houses, but it can also be a borrowing strategy for property investors.

There are additional valuation charges for these loans, but these fees should not put buyers off cross-charging loans.

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*Privacy Notice - Any information provided will be treated with confidentiality and will only be accessible within Ascot Mortgages