What is a bridging loan?
Have you found the perfect new home and are ready to purchase but still have a mortgage on your current home? If so, a bridging loan may be for you. A bridging loan will allow you to have a solid financial footing while you look for your new home before your current home is sold. This article will discuss bridging loans, how to get one and what you need to know before you get one.
If you find a house that you just have to have but already have a mortgage, most people are in a bind. It’s impossible for most people to make two mortgage payments at once. A bridging loan is the solution. If you can qualify for a bridging loan, a mortgage company will issue you a loan that allows you to have a period of time to look for a new home while using the proceeds of the sale of your first home to pay down the bridging loan. This will still require you to go through the mortgage loan qualifying process. This means you will need to have proof of income, proof of debts and proof of employment to qualify for a mortgage.
When you get a bridging loan, you need to know that these loans are not permanent. The mortgage company expects you to move quickly to complete the sale of your original home and to complete the purchase of your new home. This period of time is typically a year. It is also important to remember that you will not see any of the proceeds of the sale of your old home in most situations as it will be used to pay down a portion of the loan on your new home.
A bridging loan provides a solution when you have one mortgage but see a home you’d like to buy. As long as you can move quickly to sell your present home and buy the new home, the process should play out seamlessly.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s an exciting and very rewarding one. If you’re thinking of applying for a home loan, you can Apply Online today to get started!