Many people or families who already have a foreclosed home, have a need to change their residence. Take for example, because they need a bigger house when the family expands. Or because they need to move for work reasons. Or switch to a better home.
But, as we all know, a house or bought or sold in the overnight. By selling, we should not rush, and we must try to get the highest price possible. And the house at which we move will often be new and acquired work-plan to the promoter, and therefore is not finished (and sometimes not start.) Although we also buy used home.
How have the money to buy a new home without having sold the current home?
Most financial institutions and lenders offer their customers products called Construction Financing, Bridge Loan, Mortgage Exchange Home and other similar names. The operation of these products is generally similar, with the peculiarities that may have each entity.
Basically, it lends money to afford the new purchase (login or reservation, transfer, notary and registration for signature, etc..) In exchange for mortgaging two properties. How many times have we not yet signed the new purchase, personal loan is usually to become, at the time of signing a mortgage.
The bank will give a maximum period to sell the current property since it gives us credit (may be 24 months, 36 …). During this period we will pay only interest or extending reduced rates to sell the old property.
Another method is that the bank gives you the new mortgage (if mortgaged property also old) and in the transition period until the sale of the old house only pay the new mortgage. Once sold, this second mortgage increases its interest or fees to compensate for the loss suffered by the entity for not paying the mortgage old during the time of transition.
Each entity, as mentioned, has its peculiarities in this type of product (about finance up to 100% of new housing, some not, some offer longer terms, others less so.), So we are particularly useful to collect offers from several compare banks and building societies, and successfully negotiate to achieve the lowest cost or best conditions.
In this sense, we must ensure that the transition period is long enough to achieve the intended purpose, ie we do not see burdened by the need to sell. In addition, we should not be encumbered by the fact commissions shorten the transition period if we sign the new deed earlier than expected.
Benefits of bridging loans
In short, this type of product offers several benefits for people who want to move house. First, allow no hurry to sell and therefore do not undersell. And in turn, allows you to purchase a house without having to sell the previous one, so do not miss opportunities to buy the house you want and we keep future price increases (the seller is not expected to sell to give you money .)
Disadvantages of bridging loans
But it can also have drawbacks, because having to mortgage the two properties, incur double expenditure notary, registration, taxes, etc. Moreover, we do good numbers, to ensure that future financial situation with the new loan is assumable.
In any case, it seems the perfect product for home without seeing change prompted by the rush to sell and buy.