Real estate investors and property owners in France are fully aware of how the bridging loan works. It happens to everyone to forget certain details, especially after a few years. The youngest are often lost when it comes to asking and negotiate a bridging loan. Exactly, here’s how to do it well in 2022!
The essentials to remember about the bridging loan
The bridging loan is quite simply a financing solution offered by certain banks.. It corresponds to a partial cash advance on the sale of real estate. The sum of money granted by the bank makes it possible to finance a new dwelling following the sale of another. The bridging loan is therefore aimed at any promoter of a property purchase-resale project. He must be repaid after 12 or 24 months at the time of the sale of his current home.
In reality, the bridging loan is considered a short-term loan. Due, the repayment term cannot exceed 24 months. The principle remains simple to understand: buy another property without waiting for the sale of the old one.
The bridging loan can take two different forms:
- The dry relay.
- The attached relay.
The dry bridging loan covers the entire acquisition, and the sum borrowed must be repaid at the end of the real estate sale.. Otherwise, the back-to-back bridging loan comes into play. In the event that the sale of his property is not enough to cover the new purchase, the bridging loan must be supplemented by a conventional mortgage. The advantage lies in the possibility of opting for a partial early repayment of your mortgage on the new property. Of course, if the sums collected are insufficient, this option will be automatically deleted.
The steps to apply for a bridging loan and negotiate its rate
The steps for get a bridging loan are not binding, contrary to popular belief. The first step is to assess the value of the current property. Go to a real estate agency to obtain concrete information. It will also be necessary to take into account the outstanding capital of the current mortgage.
Other criteria come into play, such as the type of property for sale (old or new). Ditto for the amount of the property to be purchased and that of the property to be transferred. The personal contribution can also be a game-changer. Hence the need to do a bridging loan simulation. Online tools allow you to quickly simulate the amount of your bridging loan. The intervention of a mortgage broker will be of great help.
Now, all that remains is to compile your bridging loan application file. It is strongly advised to request the intervention of a mortgage expert. This speeds up the whole process. The case must be solid. This is why it is necessary to provide:
- A sales mandate from a real estate agency.
- A title deed.
- Proof of resources (tax notice, last 3 payslips, copy of an employment contract, etc.).
- Bank statements.
- Amortization schedules for its outstanding loans.
To further reassure his banker, all he has to do is submit a sales agreement. It thus becomes possible to speed up the process of obtaining the bridging loan.
In general, the rate of a bridging loan is higher compared to that of conventional loans. This is a difference of 0.10% to 0.30% compared to the standard rate schedule. By playing the competition, it is quite possible to obtain the best rate. Simply go through a mortgage broker. To reduce your monthly payments, you will have to repay your main loan in advance without having to pay penalties. Once the property has been resold, the credit settled, all that remains is to allocate any surplus to its new credit.