Set up by the banks to help households a new property, mostly real estate until the old is sold, the bridge loan consists of a cash advance granted by a banking institution. This advance corresponds to a percentage of the estimated amount of the sale of the unit, which may vary depending on the probability that the transaction will be completed quickly or not.
Simulation of the amount of his loan relay
There are three types of bridge credit:
The first is a bridge loan backed by a classic home loan. In other words, when the borrower has sold his property and repaid his bridge loan, he continues to repay his classic credit for his new investment.
The second is a global loan including a bridge loan and a conventional loan. When the property is sold, the loan amount is deducted from the proceeds of the sale at no cost, and the credit terms are then revised.
Finally, it is also possible to subscribe to a relay loan called “dry”, that is to say, not coupled to another credit. This is particularly the case when the cost of the new purchase is less than or equal to that of the sale of the old one.
To make a simulation of the bridge loan, here is the mathematical formula: 60 to 80% x value of the property – capital remaining due (CRD)
In all cases, the amount of the bridge loan is equal to a percentage of the value of the property less the capital remaining to be repaid.
The relay loan in a brief
Since the bridge loan is based on a percentage of the value of the property to be sold, the banks need to have a relevant and reliable indication to study the file and are therefore based on an estimate made by professionals of the bank. real estate (agencies, notaries …).
It is to guard against a possible overestimation of the property, and therefore a lower sale than expected, that the banks generally advance only a sum of money ranging from 60 to 80% of the value of the property.
A file where a compromise is already signed must, in general, be able to benefit from a more important advance than a file where the good is for example not yet put on sale.
Hence the importance of a fair estimate of the value of the home, and a market-consistent selling price.
Given the specificity of this mortgage, the bridge loan is therefore subscribed for a short period, usually one year, and is renewable once if the property has still not found a taker.
But the bridging loan actually ends once the home is sold, with no penalty for the borrower.
During the term of this credit, borrowers are only required to pay death insurance. As far as interest is concerned, they may, in fact, pay them monthly, or at the end of the loan. The total capital advanced by the bank is reimbursed when the transaction is realized.
Simulating your bridge loan is essential as it allows you to better adjust the rest of mode of the new property; knowing that the remainder of the sale should also be based on 20 to 40% depending on the case and that prepayments are generally subject to bank charges.