The associated bridge loan: how is it different from other bridge loans?

The bridge loan is an effective solution to fill a cash shortage. Generally, a dry bridge loan is more expensive than an associated bridge loan.

On the other hand, whatever the bridging loan chosen, it remains attractive if the sale of the property takes place after a maximum of one year, otherwise its cost price is very high.

The associated bridge loan allows you to buy new real estate before selling your own

Explanation and definitions of the associated bridge loan

Explanation and definitions of the associated bridge loan

This bridge loan, as its name suggests, is generally associated with conventional credit. That is, the sale of the borrower’s current property does not allow him to finance his new property in full. He must therefore take out additional credit.

For the banks, it is a question of proposing to the buyer a financing plan composed of the following two elements:

  • A bridge loan
  • Long-term credit

This is what we commonly call a bridge loan associated with a long term loan (or bridge loan backed by a long term loan). More concretely, the bank advances you 60 to 80% of the total amount of the sale of your current property, which must be reimbursed within 12 months maximum.

This advance can be renewed a second time for the same duration. Consequently, the buyer has more time to sell his property, between one and two years.

As long as the sale of the current asset is not carried out, the purchaser must repay the monthly payments of the long term loan and the interests of the bridge loan, the latter being a loan in fine. Once the property has been sold, the bridge loan is then fully reimbursed by the amount received from the sale of the property and the purchaser will only reimburse the monthly payments associated with the long-term loan.

Application of the bridge loan via an example

Application of the bridge loan via an example

In order to fully understand the associated bridge loan, please read the example below. You have real estate with an estimated value of $ 200,000. The new property you want to buy is $ 300,000.

Your bank will grant you a bridge loan of around $ 140,000, which is equivalent to an advance of 70% of the value of your current property. You take out a mortgage for the entire purchase price of your new property, namely a loan of $ 300,000. This loan of $ 300,000 includes the $ 140,000 of bridge loan and therefore $ 160,000 of long-term loan.

You have up to two years to sell your property. Until then, you will have to repay the interest on the bridge loan and the monthly payments on your new loan.

Once your current property sold for $ 200,000, you will then recover $ 60,000 and reimburse directly to your bank, all of your bridging loan, ie $ 140,000.

You have several choices to use this $ 60,000: you can keep it (for work or other) or integrate it into your new credit in order to reduce the duration of it or lower the amount of your monthly installments.

TO REMEMBER !

  1. The associated bridge loan will finance part of your property until your current property is sold
  2. With the associated bridge loan you have up to 2 years maximum to sell your current property
  3. Call on Lite Lender, mortgage loan expert, to explain the implementation of the bridge loan

How to calculate your debt ratio?

The calculation of your debt ratio is decisive in the decision-making of a bank. It is this rate that will determine whether or not the bank agrees to finance a mortgage. If accepted by the bank, this rate will also define the rate of credit that will be allocated to you. Different elements will weigh in the balance to determine your debt ratio.

How to calculate your total income, step by step

How to calculate your total income, step by step

First of all, you must have your pay slips and look at the net wages or the average of the declared wages.

Please note, the calculation of these salaries will differ depending on your situation if you are:

  • an employee ;
  • a business manager;
  • in liberal profession
  • an intermittent of the spectacle

For the status of an employee, it will then be a question of calculating the monthly net income which is equivalent to the taxable net cumulation divided by 12 (the number of months annually), visible on the pay slip of December of N-1 and on the income declared on the last tax notice (therefore the pay slip of at least December last year).

If, for example, you are a salesperson and your salary includes a significant and non-negligible part of the variable to allow you to borrow a sufficient and substantial sum, then you must average the last three years of the income declared on the tax notices..

So this way, your additional income from your fixed part can still count for your future purchase.
If the borrower has not yet received a variable salary, it cannot be taken into account.

The resulting formula

The resulting formula

It then only remains to apply the formula below and you will get a first estimate of your debt ratio:

+ Support payments received
– Paid alimony
+ Weighted property income

TO REMEMBER !

  1. The method of calculating your income for the debt ratio will vary according to your profession
  2. The debt ratio must not exceed 33%
  3. The debt ratio is the main indicator on your real estate project

 

Mortgage loans – Available for your home loan.

One mortgage, one monthly payment for your home and all your credits by combining all your credits with your mortgage.

You are a homeowner, you have a mortgage and other loans or financings that are heavy on your budget, and you want to reduce your monthly payments.

Refinance your home through mortgage loan

Refinance your home through mortgage loan

With a mortgage loan repurchase, it is possible to refinance your home loan and your other loans, financings, store cards, openings of credits. You can even add a sum to cover work and your liquidity needs, without supporting documents up to 10% of the total amount of the new credit. This operation requires a notarial act. All the costs linked to the recovery of your credits are incorporated into the new credit: you must not disburse anything except for the control expertise, which is carried out only if the credit is accepted.

The maximum amount that can be granted to you is in principle a maximum of 100% of the value of the building (s) put up as collateral, estimated by an expert approved by the credit company.

It is also possible to take back only your other credits and your liquidity needs in the form of a long-term credit with mortgage, without the repossession of your home loan and over a period of 20 years maximum. In this case, the credit is made in the form of a mortgage loan for movable purpose, up to a maximum of 85% of the forced sale value of the property given as collateral (most often), minus the amount of the existing housing loan.

Your advantages

  • You can reschedule all your credits over the duration you choose, from 10 to 30 years
  • You only have one credit and one monthly payment
  • You can still have cash to cover your cash flow needs, without justifications
  • You can add an additional amount for work (carried out by company)
  • You benefit from a favorable rate
  • Your mortgage loan remains tax deductible for the real estate part

No need to travel to compare the offers of mortgage credit redemption. By submitting your request online on Cream bank, you benefit from priority and ultra-fast processing. You should only travel if your file is accepted.

We can receive you confidentially and outside bank opening hours.