A bridge mortgage may be the right thing to buy a new home, because it is a decision to import and more if you are going to mortgage, this means debts that are only solved over the years.
Many people choose to mortgage a house to buy their home, but in some cases the needs change over the years and may need a new home, but if the house where you live is still being mortgaged is a big problem for We ask for another mortgage for a new home and that is where the bridge mortgage offers a versatile solution to this problem.
The bridge mortgage offers to unify two mortgage loans in one until the moment the old house is sold, this reduces the cost of the fees that the owner must pay in comparison to having two separate mortgages, and it offers time necessary for sell your old house.
What happens if my old house with a bridge mortgage is not sold?
If the sale of the property is not achieved within the period of time specified by the bank, the owner must pay the amount that the bank financed for the old house, that is, you have to start paying two normal installments for both mortgages, for the old property that was not sold.
These usually have a grace period between 6 months and 5 years according to the bank, in which the only payment that must be made are the interest of the bridge mortgage loan (a single reduced interest for the two unified mortgages).
There are special cases where banks usually do not have that period, they only offer a special reduced fee to pay until the old house is sold.
The default of bridge mortgage
Banking institutions provide the holder with a relevant income to receive this service so that no default occurs, but if this is the case, the banking institution will proceed to execute the mortgage of the two floors that constitute the collateral of the debt contracted.
This means that the two houses, both the old and the future, will remain in the hands of the banking institution.
If the auction manages to cover what is owed with the sale of one of the two properties, at least one property can be saved.
Advantages and disadvantages of the bridge mortgage
As all types of loans each have their advantages and disadvantages, the characteristics offered by the bridge mortgage are very convenient, this avoids having to hurry to sell our old house to mortgage the new home and all the necessary process.
On the other hand, if we opt for the bridge mortgage and the old house is not sold, it could lead to the mortgage of the two properties, which is unlikely because if the bank offered this service it is because it is sure that it could do with the two mortgages.
However, it is better to foresee that to regret, it is advisable to carry out a study of the old property prior to the purchase of the new property, which could suppose an unnecessary cost for some, but this could give you an idea of how long it could take to sell the old property and opt for the bridge mortgage .