You own a property and would like to buy a new one. Unfortunately, you need to sell your first acquisition to finance the second. The bridge loan is for you. Update on this usual question.
What is bridge credit?
The bridge loan is an ordinary mortgage loan which allows you to compensate for the expected income from the sale of a first property in order to finance the acquisition of a second.
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Cas d’école
You own a house and your family is growing, or you have found a new job in another area and you need to move and buy a new house.
Problem: you absolutely need to sell your first real estate acquisition to finance the second. However, selling your current home can take time to find an interested buyer. However, you do not always have the option of waiting and you do not want to miss the opportunity to buy that second property that meets all your criteria.
In this case, your bank can grant you a bridge loan until you have completed the sale of your first real estate acquisition.
Ordinary mortgage loan
The bridge loan is a mortgage loan that meets the ordinary conditions applicable to all mortgage loans.
A period of two years
An important note however, from usual banking practice, you have a period of two years to complete the sale of your current real estate property.
Feasibility and consistency
By taking out a bridge loan, you find yourself facing the repayment of two properties, it is therefore essential to ensure the feasibility of this loan with regard to your financial capacity.
An example is better than a long speech: you are currently the owner of a house whose current market value has been estimated at €200,000. You still have a balance of €100,000 left to repay on this first mortgage loan. You want to buy a new house worth €250,000. You will therefore take out a loan worth €350,000. €250,000 corresponding to the value of the second acquisition and €100,000 corresponding to the balance of your first mortgage loan. As the combined market value of the two buildings is €450,000, this bridge loan is feasible.
When you have sold your first house, you will be able to deduct the sale price, i.e. €200,000, from the new mortgage loan which was granted to you to purchase your second acquisition.
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