Being in a housing chain can cost you time, money and the property you’ve had your heart set on.
All it takes is for one individual to pull out of the deal and the entire chain can fall through, leaving you and all the other parties at a loss.
Luckily, there are some things you can do to break a housing chain and make sure you get the property you want!
In this blog, we’re going to outline what these are...
What is a property chain?
A property chain occurs when multiple house transactions are linked together. In other words, each house purchase or sale needs to complete around the same time, so that each transaction can end successfully.
An example of a housing chain is if you’ve found a new home to buy, but you are yet to sell your current property. The transactions are linked together, because if your current property has not sold before you try to buy the other house, you may not have the funds you need to complete the purchase.
How can you break a housing chain?
Whilst it may feel like there isn’t much you can do in this situation, there are some options you can use to either avoid or break a house chain.
- Try to sell before you start looking at buying
Selling your property before you start looking for a new home may help you avoid this situation entirely or it could help you to remove some of the parties involved. This can be positive, as if a high number of people are involved in a chain the chances of the deal falling through are greater.
It might be inconvenient selling your property before you’ve bought a new house, as you will not have your own place to move into. However, there are lots of temporary accommodation options available now, which can make being in this situation much easier.
Air BnB’s, hotels and short-term rental lets are just a few of the options that could be open to you.
Some people may be hesitant about doing this, as temporary accommodation could become expensive and there is no guarantee you will find a property you want to buy quickly.
- Get a bridging loan
Bridging loans are a short-term funding option you can get, which can help you break a property chain.
Say you’ve found your dream property and you’re desperate to secure the house quickly to make sure you don’t miss out. However, your current property is yet to sell, so you are unable to access the funds needed for the purchase. In this situation, a chain break bridging loan can be taken out to give you funding to complete the purchase whilst you’re waiting for your home to sell. Eventually when your property sells you can use the money received to repay the bridging loan.
This option therefore gives people the flexibility they need to get their next home! However, whilst getting one of these solutions can be massively beneficial, it is important to be aware of the risks involved.
First off, the loan will be secured against your property, so if anything were to go wrong it could put your home at risk.
Not only that but the interest rates are usually much higher than other types of finance options, since it is a fast short-term funding option. This means that it can become quite expensive.
Finally, if you are struggling to sell your house, you may have to accept a lower price to pay the bridging loan off.
That said, purchasing your next house can be a life changing decision, so you may consider it to be worth the higher costs to secure the house you want.
Summary
To sum up, it is possible to break a housing chain and get your dream home. There can however be risks and it may be expensive. So it’s important for you to weigh up the different options, think about what you could comfortably afford and reach a conclusion on what the right choice for you is.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
