You own a property and you want to buy a new one. Or you have just found the property of your dreams and have not yet had the time to sell your current property. The problem is that you are not able to repay both your current property and your new property.
Take out bridge loan
In this case, you have the option of taking out something called a bridge loan.
This loan will finance part of your new property while you sell your current property. It is an advance operated by the bank, which is equivalent to 60 to 80% of the total amount of the sale of your current property.
The dry bridge loan allows you to transform your real estate assets into future contributions
For security reasons, the bank does not have the possibility to advance you 100% of the total amount of the transfer, it is too big a risk for it. In addition, she will send a real estate expert to correctly assess the amount of your property for sale.
Depending on the situation, there are two types of bridge loan: the dry bridge loan and the associated bridge loan (sometimes also called back-to-back bridge loan). Let us first take a look at the dry bridge loan.
The dry bridge loan: how to subscribe and its advantages?
The dry bridge loan is taken out by the borrower if the sale of his current property makes it possible to finance his new real estate project. Therefore, no additional loan is needed and this bridging loan remains the only loan in the financing plan .
This dry bridge loan is often used by seniors. Indeed, seniors often have finished repaying the credit of their property and have enough savings to not have to ask for an additional loan. That is to say that the amount collected for the sale of their property, in addition to their savings, allows them to fully finance their new property.
The dry bridge loan makes it possible to advance funds to the buyer for his new purchase, over a period of twelve months (renewable once).
There are two ways for the borrower to repay his bank:
- the capital and interest due will be reimbursed once the sale of the current asset has been made;
- interest is first reimbursed once the bridge loan is contracted and the capital will be reimbursed once the sale of the property has been made. This second repayment option is the least expensive.
In addition, the borrower will therefore have no prepayment penalties.
The dry bridge loan helps you in the event of a shortage of cash between the sale of your current property and the purchase of your new property. However, this bridge loan is expensive. The interest rate applied is high and the monthly payments are calculated on all the capital borrowed from the bank.
TO REMEMBER !
- Use the dry relay loan if you are an owner and want to buy a new property
- The bridge loan will finance part of your property while your current property is sold
- The amount of the dry bridging loan is fixed according to the value of your property