The pandemic and specifically the confinement has highlighted the shortcomings that many homes included without being aware of them many times. By spending more time at home the defects have multiplied. That is why many families have decided to change homes during this year 2021. How to do it without first selling the one we already have?
Mortgage Change of house
You no longer need to wait for the ideal buyer for your current home to appear. You can move house before this happens and enjoy a better quality of life.
Will I have to face two mortgage payments?
This is the first question that may arise before what we ask you and the answer is no.
Home change mortgages also known as “bridge mortgages” work as follows:
- The calculation of the outstanding principal of your current mortgage is made.
- It also calculates the amount you need to acquire your new home.
- A new mortgage operation is formalized in which during a certain period you will pay a reduced fee, thanks to the fact that the entity will apply a lack of capital and even a part of the interest.
- Once you sell the house, part or even all of the new mortgage loan is amortized.
What are the main advantages of this mortgage?
Many times it happens that you find an excellent opportunity to buy a property because of its attractive price or simply because it is the ideal home for you and you must let it go because you do not have the necessary capital for its purchase.
Before you must sell your new home and get rid of the current mortgage. Well, with the home change mortgage, this long wait is no longer necessary, you can acquire your new home while you have some time to sell the previous one.
Does the bridge mortgage involve risks?
This mortgage loan has become a very interesting financing formula in these times, however, it is not without risk and it is important that you know them.
The financial institution grants us a deadline to sell the current property. Once this period has elapsed if it is not sold, we will have to face the payment of two mortgage payments, the old one and the new home. Can your current income bear this burden? A very interesting question to analyze.
On the other hand, being the mortgage on two real estate, these will serve as collateral. Two properties are then being put at risk, and you may be left without any in the worst case scenario.
What are the keys to securing the operation?
Most bridge mortgages have the following conditions, although it will always depend on each bank and the ability to negotiate with it.
- Term of 6 months to 2 years to sell the current home.
- Lack of capital of up to two years paying only interest, and even on occasion only a part of them is supported during this period.
- The total term of the mortgage operation is around 30 years.
- Once the sale occurs, you will only have a mortgage on the new home.
Before diving into a financial operation of house change we must be realistic and take into account two fundamental factors: is my home in a good location for a quick sale? Do I have little left to amortize the current mortgage loan?
The answer to these two questions will be the key to everything going well.
We know the power of negotiation
As we always say, negotiation is an art that if you master, you can get many more benefits than if you let yourself be carried away by ignorance of the sector.
The best financial brokers are not in banks, so if you venture alone to go entity after entity in search of your bridge mortgage, it is very possible that you end up frustrated, exhausted and with a bad mortgage.
The advantage of these mortgage professionals is that they will know how to negotiate the best bridge mortgage just for you, that is, they will customize the product based on your credit profile and this will undoubtedly save you a lot of money.