Relocation Loans – How Do They Work
Many homeowners aren’t aware of the options available to them when they’re ready to upsize to a bigger second home or have to move for work. It can be stressful enough getting back into the house-hunting game to find that perfect next home. But getting your finances in order can often prove to be a challenge. In a perfect world you would find your new home AND a buyer for your existing home at the same time.
But the reality is that it doesn’t always work out that seamlessly. Fortunately, there is an extremely useful home loan solution that could make the whole process a relatively smooth one.
It’s called a relocation loan.
You may also know this as a bridging loan. Essentially, the lender, like Mortgage House will loan you the amount to buy and relocate/move into your new home before you’ve sold your previous home. Once sold, the proceeds of the sale are used to pay down or reduce the mortgage on the new home.
How relocation home loans work
A relocation home loan can be arranged at short notice and without the need for lengthy paperwork required. Both properties, the one you’re buying, and selling, are used as security for the relocation loan. That’s where the equity in your current home comes into play and can make a real difference to your borrowing power.
Another attractive benefit of relocation loans is that lenders will often base your repayment calculations on the anticipated mortgage balance after your loan has been paid off with the proceeds from the sale of your old house. That’s why it’s essential to have a very realistic expectation of the value of the property you wish to sell so that you’re not left with an unreasonably large debt.
Relocation loans are more useful than you think
Depending on the lender you choose, most relocation loans will give you a window of six months to a year to sell your current property. To make it easier on the pocket, you may also be given the flexibility to make interest-only payments during that period. But also remember that by extending the selling period, more interest accumulates at the peak mortgage level.
Many people are reluctant to sell if they have not found a new home to purchase, particularly if prices are rising. If there is good equity in your existing property, a relocation loan could be the way to get moving.
Relocation loans are a smart move for people moving homes who need regular repayment schedules, minimal refinancing costs and the ability to adjust to changing times. Look no further for convenience and savings, Mortgage House provides plans that are individually tailored and ready for approval.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying your next home, you can contact us for information about the best relocation home loan options for you. You can also use our calculators to help decide on the best loan for you.