Can my 75-year-old parents get a bridging loan?

Q My mum and stepdad are likely to be moving nearer to us. As it would seem better for them to buy a place and settle in rather than wait until they have sold their own property, what are the chances of them getting a bridging loan? They are 75 and 80 respectively, and not in good health. As their income is not much more than the state pension, would the repayments be too high on, say, a £250,000 property?

KL

A The payments on a bridging loan could well be on the high side. Bridging loans typically have an interest rate of 2-3% over bank base rate (currently 4.5%). So on a loan of £250,000 - and assuming an interest rate of 7.5% (that is, base plus 3%) - the monthly repayment (of interest only) would be in the region of £1,550. Even assuming an interest rate of 6.5% (base plus 2%), the monthly interest payment would be just over £1,350.

Although it may seem a better option from a purely practical point of view, committing themselves to buying somewhere before selling their current property could also be a risky business. This is because if the sale proceeds from their current home aren't enough to cover the purchase of a property near to where you live, they will need to find some way of financing the shortfall.