From Oi Realtor we want to tell you what you should do with the mortgage loan if you want to change your home. Continue reading the article to find out.
In this article you will find:
The reasons for moving house can be many, for example, for work reasons, family situations, among others. One of the cases that can occur is that, to change your home, you need to sell your current home and don’t know what to do with the mortgage. Most likely you have raised the possibility of canceling the mortgage at the time of sale. However, there are several options you can make if you have a mortgage loan on the home you are interested in selling.
Here we tell you what are your options if you are interested in changing your home and you don’t know what to do with the mortgage.
What happens to your mortgage loan?
In these cases, you have three alternatives to change housing:
Sell the current property and buy the one you are interested in
this option It is not the most advisable, since it brings inconveniencesfor example, the fact that it is common for it to be undersold. This can happen if you have hurry to buy the house. Another common problem in this case is that It costs too much to sell your house and you lose the opportunity to buy the one you were interested in because someone else has already gone ahead.
Request another mortgage from the bank
In this way you should pay off both mortgage loans at the same time. The main problem with this option is that requires a financial solvency that allows you to pay two mortgage payments at the same time.
Request bridge mortgage
In this case, The bank allows you to obtain a loan with which it is possible to buy the new property before selling the current one despite having a pending mortgage.
Everything you need to know about the bridge mortgage
When we speak of a bridge mortgage, we refer to a type of mortgage loan that is very useful for people interested in changing their new home and have a pending mortgage on their current property.
When requesting a bridge mortgage or home exchange mortgage, they will have a temporary financing until they manage to sell the home they own. In this way, it will be possible moving into the new home while looking for a buyer for the old one.
In this way, the applicant for this type of mortgage will achieve get the two you need in a single loan. In other words, you will get one to finish paying off the house you live in and one to start paying off the new house. All this until I achieve sell the current home, but without having to face higher interest rates.
When the first home is sold, the part of the loan that corresponds to it is canceled and the mortgage for the new property is formalized. This means that the bridge mortgage makes it possible for The bank advances you the money to buy the new home in addition to giving you a certain period of time until you manage to sell the current one.
It is important to note that in this type of mortgage you must meet various requirements requested by banks. In addition to having a period of time to sell the house. Here we will tell you what their points for and against.
Requirements to obtain a bridge mortgage
Get a home exchange mortgage nothing will be easy. Keep in mind that the bank will carry out a complete and detailed study to ensure that we have the financial solvency necessary to face the payment of the bridge mortgage.
The requirements that the bank will take into account:
Job stability
The bank is more likely to give you the bridge mortgage if you have a indefinite work, seniority or high income. On the other hand, it is advisable to have some income of a minimum amount of 2500 euros to face the mortgage.
have savings
The banking entity does not usually fully finance the purchase of the new homethat is why, While waiting to sell the old house, you must have savings for the down payment on the house you are going to buy.
No previous mortgage defaults
If you have not paid any installment of the mortgage on your current home or if you have exceeded the term, the chances that the bank will grant you the bridge mortgage will be lower. Furthermore, it is essential not have contracted other personal loans with the bank, since the bank can think that you will not be able to face several loans.
What is the period of time the bank gives you to sell the current house?
In general, the grace period is usually between six months to five years. This can vary depending on the bank. In other words, the period of time we have to sell the house will be specified in the bridge mortgage contract.
During this time, the contracting party of the bridge mortgage can opt for different types of quotas:
must be paid just the interest on the loanso that the amortization of capital pending repayment is not carried out.
one is paid lower installment to which must be paid after the sale of the home. In it are found including interest on the loan.
In this case the capital to be returned and the interest are paid at their normal rate.
In any case, regardless of the type of installment chosen during the grace period, once the house is sold, the mortgage for the new home is formalized.
What happens if the grace period ends and the house has not yet been sold?
The client will have to pay the total amount that the bank financed from the beginning even though the property has not been sold. Therefore, it is a risk that must be taken into account when contracting a bridge mortgage.
Points for and against the bridge mortgage
Undoubtedly, like any other mortgage, there is a series of Advantages and disadvantages of the bridge mortgage what is essential consider when hiring her to change housing.
Points in favor
- Time to sell the house
The bridge mortgage gives us more time to sell the house at the market price. This allows us avoid a bad sale of the house at a lower price and in a hurry.
It is a more comfortable option since We will group two loans into a single mortgage, which allows us to change homes without having sold the one we have.
In the event that a person must If you move from the city for personal or professional reasons and choose to take out the new mortgage elsewhere, the bridge mortgage saves on transfer costs.
points against
The bank requests meet a series of quite demanding requirements for the person who is interested in hiring her. The client must have a great solvency and be a profile with a risk of default very low.
We must face the risk that the house will not be sold during the grace period and having to pay a high cost.
The interest rate on this type of mortgage loan, It will always be superior to a conventional mortgage.
After reading this article, we are very interested in knowing what your opinion is about changing your home by opting for a bridge mortgage. If you are interested in sharing it with us, you can do so in the “Comments” section of our Blog.
If you find yourself in a situation that you cannot solve on your own, do not hesitate to go to Oi Realtor. A team of professionals will be at your disposal and will help you throughout the process. We are waiting for you!
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