The bridging loan allows borrowers to buy new housing before selling the current one. A solution that frightens some, fearing that the resale will not materialize quickly. The point on this complex loan, in question.
How much can the bank advance?
The amount of the bridging loan is calculated according to the value of the property to be sold. In general, it represents 50% to 70% of the value of the property, says the French Banking Federation (FBF) in a dedicated guide. There is no intangible rule: several brokers mentioning the possibility of climbing to 80% of the value of the property.
This can be 60% in an area where sales are difficult, and this easily rises to 80% in Paris, Bordeaux or Lyon where the real estate market is extremely dynamic, judge Mal Bernier, spokesperson for Meilleurtaux. The fact that a sales agreement is signed also makes it possible to approach 70% or even 80% of the value of the property.
Precision: this percentage means minus the capital remaining due. More specifically, if you still repay the loan for the initial home, the amount of the bridging loan will be less. Logical: This loan is only intended to advance the money that you will receive when selling your property.
For a house with a value of 250,000, on which you have 150,000 to be reimbursed, you can obtain a bridging loan of 70,000. That is to say 70% of the proceeds of the sale that you can cash (100,000), the rest being used to repay the balance of your credit.
Who estimates the value of your property?
The bank grants the bridging loan. Banks are increasingly asking for a double estimate responsible for the development of Good Credit. They often request at least one estimate from the notary, followed by internal expertise. This procedure can generate administrative costs, up to 300 euros, but they are included in the bridging loan.
What rate and what duration for a bridging loan?
1.40% to about 1.60%, for bridging loans with an initial duration of 1 to 2 years, according to Ocane Gridel, from Good Credit. By way of comparison, in this fall of 2019, the average mortgage rate is around 1.25% for a conventional bank loan over a period of 20 years, and slightly below 1.50% over 25 years.
What are the different bridging loan formulas?
Three relay credit formulas are possible. The first: the loan relay dried up, without any other associated credit. This formula is particularly preferred by seniors or no-retirees who settle in smaller and cheaper accommodation or leave a big city for a coastal or rural area.
Second possibility: the loan relay associated with a classic real estate loan. The latter will then finance the purchase of a property worth more than the current accommodation. This is the most common form of bridging loan, with a dedicated short-term credit (the relay), and long-term credit.
A bridging loan associated with a classic credit
A couple bought an apartment 220,000 in 2015: they took out a loan of 180,000 at 2.20%: with borrower insurance, their monthly payments are 829.
Since then, the value of the property has increased to 250,000 and their wages have increased (3,000 per month each). They target a house with a value of 350,000, which represents an operation of 376,000 with notary fees, which will also be added to the warranty costs. (2080).
The broker Good Credit made a simulation of a relay loan for this couple. The bank grants a bridging loan at 1.40% of 64810: this is the value of the apartment for sale 250000 minus the credit remaining to be reimbursed ( 157413), funded at 70%.
This couple, therefore, signs a bridge loan of 64810 over 1 year and a classic bank loan, at 1.20% over 20 years, of 313311 to finance the purchase of their house. Monthly payment before resale: 923.52. A monthly payment that integrates borrower insurance for new loans and the interest of the relay.
When they manage to sell their apartment, the initial loan, as well as the bridging loan, will be settled. This couple will have 27,777 of surplus, which can then be saved or used for work. After the resale, only the classic bank loan will remain, the monthly payments of which will be 1,564.98.