A loan or bridging loan takes the form of a credit allowing the holder to obtain a partial advance on the amount of the sale of his current home from his creditor (bank, credit institution). In practice, the repayment of capital is suspended until the sale of the initial property takes place. In this way, the borrower only reimburses interest during the period of his bridge loan. The bridging loan is short-term and usually runs for one to two years.
What are the advantages of bridge credit?
Thanks to the bridging loan, you can position yourself on the property that you want, without having to sell your current property beforehand. This solution avoids selling off your original property to sell at any price in record time. The bridge loan also makes it possible to avoid taking a lease during the transitional period between the sale of your initial home and the purchase of the new property.
What are the risks of bridge credit?
The bridge loan also has certain disadvantages:
- – It presents a financial cost. The longer the borrower has to sell their original home, the higher the cost of their mortgage.
- – If the borrower fails to sell his original property in a timely manner, he will be forced to reduce his price, sometimes to a significant extent in order to sell it before the expiry of the loan maturity date.
- – If the initial good is not sold, or if the sale is made at a low price, the bridging loan will not have been fully repaid. The final repayment will then be made by means of conversion into conventional real estate credit. The operation could be more expensive than expected.
You plan to buy the property of your dreams, but you must separate beforehand from another property to make the financing? Our credit may be a solution for you.