Bridging Loans
If everything were perfect, purchasing a new home and selling your old one would take place at the same time. However, at Monteus we know life doesn’t always go to plan. Bridging mortgages were designed to address this very issue.
Single loan
Both properties are used as collateral for a single loan. You choose this option if you intend to sell your existing home within six to twelve months. As soon as your house is sold, the proceeds are added to your debt balance.
Separate loan
Additionally, banks and lenders can offer you a separate loan to fund the purchase of your home. For the agreed bridging period, you will not need to make interest payments on this loan. If you already have a loan, you will pay the interest and repay the existing loan as normal. When your old house sells, the loan is paid out, and you will have to negotiate any additional debt.
Banks and lenders are aware that most people can’t afford to pay three mortgages at the same time. Therefore, bridging loans are designed to make things easier for borrowers.
Criteria and Eligibility:
- Your existing home is taken into account. Bridging loans are approved based on how well you can repay them after you sell your existing property or current residence. Bridging loans are usually repaid with the proceeds from those sales. You may feel more pressure to get the best price possible for your old home as a result.
- Interest-only repayments. You will be required to pay the bridging loan interest only while you wait for your existing home to sell. You can lower the amount that will be added to your mortgage on your new home by paying toward the principal balance in addition to making payments on interest.
- We can assist you with working out your repayments. The Monteus tool can help you determine how much interest you will pay and how much principal payment you will need to make. Typically, bridge loan rates are higher than conventional loans, a factor offset by the riskier home loan. An additional cost or fee can be added to the monthly payment of a bridge loan.