Fill the gap with a bridge loan
If you are considering moving on from your home and purchasing a new home then you might be concerned about the process of selling your existing home to buy your new home. No-one wants to pay two mortgage repayments at once and most people couldn't afford to do that so you might be worrying about selling your current home on time so you won't have two mortgages on the go. We can't control the market though and sometimes a house just doesn't sell as quickly as you would like it to. This is when a mortgage bridge loan can help you out.
Mortgage bridge loans are a short term loan that is designed to enable you to move into your new home even before your old home has been sold. A bridge loan can help to pay off the old mortgage and also to put down a deposit on the new home. By using a bridge loan you don't have to wait for your old home to be sold before buying your new one.
When you take out a bridge loan you are usually not required to make a payment for the first six months of the loan. However, if your old home remains unsold at the end of that six month period then you will need to begin making payments. The payments required then will be interest only payments as you don't want to be building equity on the old home. When your old home is sold you can then pay off the bridge loan and get a traditional mortgage to finance your new home.
Bridge loans are very handy for those people who want to move into their new home straight away or are anxious to purchase the home they have found before someone else does, but haven't been able to sell their existing home as yet. In some situations a move is necessary to move closer to a new job or to relatives, whatever the reason for the move, a bridge loan can make it much less stressful financially.
There are some disadvantages to bridge loans however that you should be aware of. Because a bridge loan is short term and is a little more risky than a traditional loan, it will have a higher interest rate and higher fees. So when you do begin to make repayments you will be making them at a higher rate.
Quite often when using a bridge loan you will have to use the same finance company for both the bridge loan and for your new home mortgage. The disadvantage of this is that you could find yourself locked in on terms that may not be the best terms when compared to other lenders. Bridge loans will vary from lender to lender on closing costs, fees, interest rates and terms and some lenders won't even offer bridge loans. It is important to understand all aspects of a bridge loan before signing any contracts.
TAGS: bridge loan, home bridge loan, home bridge loans, gap bridge loans
Article Source: Messaggiamo.Com
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