Mortgage bridge loans are loans that allow a homeowner to borrow against the value of their current home so that they can go out and buy a second home. A mortgage bridge loan is a great type of loan for homeowners who want to purchase a new home, but are still trying to sell their old one. Homeowners who want to purchase a second home before they have paid off their current home can also benefit from a mortgage bridge loan. With a mortgage bridge loan, you do not need to sell off your first home in order to purchase a second or intend to sell your first home after you have bought a second home.
How mortgage bridge loans work is that the homeowner can borrow up to 85% of the home’s value, and they can borrow the funds that are needed to secure the second home. For example, if you have a home that is worth $150,000 you can borrow up to $125,000 on the first house. If you are looking at a house that is worth $200,000, you can also borrow $170,000 to pay for the second house. Most of the time this is not enough money to cover the entire cost of the house, so you will need to use the equity in your first home and come up with some cash to make up the difference. Mortgage bridge loans are have a term of one-year, so the loan must be repaid in one-year or you could risk losing both your homes.
With a mortgage bridge loan when you are the owner of two homes because you are trying to sell one you only, have to pay the interest on your monthly payments. Once you have sold the first home the portion of the mortgage bridge loan is immediately repaid, so now you only have the mortgage payments on the second home. With a mortgage bridge loan, you will also be prepaying six months of interest on your new home to help cover the moving costs. These six months of prepaid interest allows you to make no payments on the mortgage bridge loan for six months, so that you can get your house sold. If you do not sell it in six months, you will have to start making interest only payments.
Like stated income mortgage loans mortgage bridge loans have their risks. The biggest risk you take when using a mortgage bridge loan is that your first home will not sell, if you can’t sell your first home in time you will be responsible for making the payments on both mortgages. Lenders use mortgage loan leads to find people interested in mortgage bridge loans because the lenders will be able to benefit from the mortgage bridge loan. The reason for this is that the same lender who issues the mortgage bridge loan also has to carry the mortgage of the second home.
If you are interested in applying for a mortgage bridge loan the best place to go is to a mortgage loan broker. The broker will have a mortgage loan processor fill out your paperwork to get things started. The mortgage loan process will also verify all of the information that you provide the mortgage loan company to ensure that you can qualify for the mortgage loan. Once you get your mortgage loan approval for a mortgage bridge loan will need to sign the papers before you can get the house, same as with a regular mortgage.
