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A mortgage bridge loanor bridge mortgage, is a financial product that allows you to buy a new home while you are still unable to sell your current one. The entities provide the client with lower instalments until he sells his current mortgaged property.
The Dexter Group offers bridging loans for mortgages:
FROM 1.000.000€
UNTIL 150.000.000€
WE FINANCE ALL TYPES OF URBAN DEVELOPMENT AND BUSINESS PROJECTS
You should bear in mind that taking out a bridging loan can be a good idea if you have a house with an outstanding mortgage, you cannot (or do not want to) sell it yet, and you want to buy a new home.
You are probably wondering how it is possible to finance a new house if you are not selling yours and you still have a mortgage on it. To clear up any possible doubts you may have, below we explain how a bridging loan works:
The entity will grant you a mortgage loan on the two houses; the one you will buy and the one you do not want or cannot sell yet. In other words, you will have two houses mortgaged with the same loan. You will have to use the credit to pay for your new property and pay off the mortgage on your previous home.
With Dexter Global Finance and its mortgage bridge loan you can pay off the loan you have on the house you can't yet sell and finance up to 50% of the appraised value of the purchase of your new home.
The monthly instalment can be paid in different ways, not only through the traditional instalment, consisting of the principal plus interest. There are two alternatives, the option of the instalment with no capital repayment, in which only interest is paid without amortising capital; and the special reduced instalment, in which a lower instalment is paid than the one that will be paid when the home is sold.
When you find a buyer within the period given by the bank, you can use the money from the sale to pay off part of the debt and free your old home from encumbrances. From that moment on, you will have a traditional mortgage on your new home and you will pay normal instalments, made up of capital and interest.
Private financing is an essential alternative to consider when bank financing is unable or unwilling to assume the risk of granting a bridge loan for mortgages.
In addition, bank loans usually go through long waiting times before they are granted, due to the amount of bureaucracy of traditional banking. In contrast, alternative financing can offer you the speed, convenience and flexibility that traditional financing lacks.
Undoubtedly, another of the main advantages of applying for a bridging loan is that it allows the beneficiary to sell their home without haste, without being forced to undersell their home at a below-market price.
Another advantage is that, for the duration of the bridging loan and as long as the initial house has not been sold, the instalment payment can be negotiated. In this way, the borrower can pay a reduced instalment or only the interest. And when the house is sold, the proceeds can be used to repay the outstanding amount of the first mortgage loan and the bridging loan itself.
A property developer is a natural or legal person, public or private, who, individually or collectively, develops housing for sale and purchase. That is to say, among its main responsibilities is the decision, programming and financing of building works and projects.
Bridge loans for developers are granted by investment funds to developers who have land, or access to land, to start a project, but do not have sufficient resources to start the project, obtain the licenses, and the level of pre-sales that banks require to grant a developer loan.
Once the promoter credit has been obtained from the bank, this bridging loan is cancelled and is therefore used for short periods of time.
The purpose of this type of loan is to enable the developer to acquire everything necessary to carry out his objectives, such as acquiring the land, the necessary permits, contracting the construction company and subsequent financing.
Your bridge mortgage lender will give you a margin, usually between 6 months and 5 years, to sell your old property, depending on what you can negotiate.
During this time, you will enjoy a capital grace period, which means that your repayments will be interest only (not capital). In other words, you will pay much lower monthly repayments until you manage to sell your old house. The amount without a grace period should not exceed 35% of your net monthly income.
If you want to sell your current project or real estate development, you should make sure that your house or building is "saleable". It is not advisable to take out a bridging loan if you are going to have difficulty selling your project because it is in a bad location, for example.
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Data Controller: DEXTER GLOBAL FINANCE, S.L.
C.I.F.: B-93704138
Addresses:
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Centro de Negocios Oasis, CN-340, km. 176, OF. 7.1;
29602, Marbella - Málaga - Spain
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86-90 Paul Street
London EC2A 4NE, United Kingdom
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