One of the most stressful parts of buying a house is when you are stuck in a buying chain. You are reliant on selling your home for the funds to purchase your new home, but the person buying your home could be in the same position, waiting on their house purchaser, who in turn can be waiting on their purchaser. This means a house buying chain can be very long, and one failed transition can dismantle it.
There are several advantages to breaking the housing chain. You can arrange a definite completion date for the purchase of your new home. If you are not waiting on a buyer for your home, then many sellers will prefer you, as they know that you can complete the purchase of their house quickly. You are also less likely to be gazumped when another buyer places a higher offer on the house you want to buy.
There are two ways to break a housing chain: firstly you could keep your existing home and raise a mortgage on it to fund the deposit for a new mortgage on the new home. If you intend to repay this mortgage after your existing house has been sold, you will be charged an early repayment fee.
The second solution is to use a bridging loan to fund the purchase of the new home until your existing home has been sold. This will remove the time pressure in selling your home. You will pay interest on the loan, but you will have broken the house buying chain and will not be charged early repayment fees.
