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My parents haved fallen in love with a house but have not yet sold theirs.
What are their options (if any) for trying to buy the house and use their existing house as a guarantee until they manage to sell it?
Their house has been valued 70k higher than the one they want to buy.
My father has a reasonable pension and works 2 days a week on a zero hours contract.
I know the lending rules have been tightened recently so there may be no avenues for them to pursue.
a bridging loan might be the most appropriate depending on your parent's views on risk and timing of sale of their own house, but they will always be more expensive than a standard mortgage, but you only hold in place for a short period of time.
Ive used Brooklands before, they charge fees, but they are pretty good at getting a product that suits your needs.
http://www.brooklandscommercialfinance.com/property-finance/bridging-finance
Attitude to risk being the operative phrase here.
Get a bridging bridging loan for 6 months but then not sell the house for 8 or 9 months and then weep when the bill comes in.
The only time I would suggest a bridging loan sensible in a house transaction is when then it's some certainty when the funds to repay it will come in (investment property being done up for onward sale, awaiting inheritance, where you have actually sold your house but the sale will complete later than your purchase etc).
Also, have they been approved for a new mortgage yet (or so they not need one one their house sells) With the new lending rules that came in to effect 1 April lenders seem to be reluctant to lend in retirement.
Is it an option to let one of them while the other sells
Obviously a complete PITA which I wouldn't touch with a barge pole
But you asked for otions
Oh and work out the cost of these options then subtract that from the asking price
They looked at bridging loans but like you say, costs are phenomenal if you do not sell quickly.
We did something similae last year. It was cheaper to take out an interest only mortgage on the new property than to bridge. We got one with Abbey/Santander that had no early repayment penalties. A good mortgage advisor should be able to find them a suitable product.
You'll be lucky to get any new loan interest only now.
The changes in the pension rules may give them more options in that your father than use his pension (assuming it's defined contribution) to guaranty the new loan/bridge.
They should look at the simple maths of taking a lower offer on the house they have in order to sell it quickly versus the costs of bridging. Also they should get their house on the market PDQ and see if they can get the seller of the one they want to wait a while whilst they sell. If they really want it badly they can pay him a non-refundable deposit, friends of mine did this to secure a site they wanted whilst they where selling their house.