Bridge Loan for new home PurchaseLoan for Buying a New Home
They may not yet have a purchaser for their current home, or even if they do, they may be delayed by the need to resell their current one. Bridge credits are the response to the disruption of a home purchase cycle. What can bridge credits do to penetrate a supply line? One example of how this works is someone who has a home of 280,000 and 150,000 on the mortgages for that one.
Just think if they want to move into a more pricey house valued at 400,000 but hopefully within six week. Unless a creditor basically consents to providing a home loan for the new house, the home loan will not be available until he sells his current house, otherwise they would be able to have two home loans - one for the current house and another for the new one.
After selling the old home, the old hypothec can be returned. Remaining cash from the purchase after repayment of the loan can be reinvested in the new home and the bridge loan, which is returned once resources from a new loan have been used. Interest is payable on the bridge loan, which is usually charged once a month.
Is it open or shut? Bridge credits can be either open or locked. An open loan has a definite payoff date, whereas an open loan has no definite payoff date. An open loan makes more sense if no purchaser has been found for the property. Companies use bridge credits to borrow short-term funds for low period liquidity or to fund inventory and investment in plant and machinery.