Are you considering a bridging home loan? Typically, homeowners who want to buy a property before selling their existing home apply for these loans. They can be beneficial for some owners; however, you should consider other real estate alternatives.
Let’s explore the basics of bridging home loans, their pros and cons, and which alternatives you should consider before making a final decision.
What Are Bridging Home Loans?
A bridging home loan is a short-term loan that finances the purchase of a new property while you’re selling your existing home. It’s usually up to six months, and it’s closed when your existing property is sold. And the size of the loan is calculated based on the available equity in your current home.
How It Works
The way bridging loans are structured can differ from lender to lender. Generally, the lender takes security over both properties and lends against them until both the sale and purchase process is completed. The total amount borrowed is called the Peak Debt. This includes the balance of the loan on your existing home, the new home’s contract purchase price, and any other expenses.
The Pros & Cons of Bridging Home Loans
Bridging home loans, as with everything in life, have pros and cons. Depending on your situation, you must decide if it’s the right move for you and your loved ones’ financial stability.
The Benefits of Bridging Home Loans
100% Loan on the New Property
A bridging loan can allow you to borrow up to 100% of the new property’s asking price, plus the associated costs.
Don’t Pay Double Interest
You’ll have the option of making payments only on your current loan. However, you’ll need to pay interest on your bridging loan when you sell the existing home, and the bridging loan is over.
The Downsides of Bridging Home Loans
Paying Interest on Interest
If you don’t make the necessary payments on the bridging loan, the interest is added to your balance. Therefore, you’ll end up paying interest on this interest.
The 6-Months Deadline
A bridging loan is a short-term loan, and there are penalties for exceeding the established deadline. You have to sell your house in less than six months or twelve – if you’re building one from scratch.
A Better Alternative: Philadelphia Home Buyers
Bridging home loans aren’t always the better alternative when selling and buying properties at the same time. Recently, many homeowners have been working with local home buying companies, as they ensure a wide range of benefits. Instead of going through stressful and time-consuming processes, they’re able to get cash in hand in seven days. Then, they’re able to buy another property with that money.
Philadelphia home buyers are the real estate market’s latest trend. They buy houses fast in Philadelphia and guarantee an affordable and straightforward process. Here are three of the main benefits local home buyers guarantee:
You Set A Closing Date
When you work with home buyers, they allow you to set the closing date. They’re very flexible and accommodate your schedule. And, if you need more time to think about their no-obligation offer, just let them know. Home buyers can wait months for you.
Easy & Simple Selling Process
Home buying companies always want to close the deal quickly, as they have the necessary resources to give you cash in hand in seven days. They aren’t listing your home, they’re the ones buying it. Therefore, once you get in touch with them, it will probably take 48 hours or less to receive the offer.
Sell Your House As-Is
If your house is in bad condition and needs many repairs or updates, Philadelphia home buyers are the best alternative for you. They buy houses in their as-is condition and invest in major improvements once the deal is close.
The #1 Home Buying Company of all Philadelphia
We Just Buy Houses is the number one home buying company in Philadelphia. We have achieved this by making our customers the top priority of our business and making their life easier by buying their unwanted property. As a result, we have received endless five-star rating feedback that proves our commitment to high-quality customer service.
At We Just Buy Houses, our goal is to improve our customers’ lives and ensure fair all-cash offers. We’ll take care of significant maintenance and repair processes and even pay for the closing costs. Get in touch with us today; we buy houses fast in Philadelphia.