You bought a home by taking out a loan but you do not intend to keep your property? Another scenario, you want to seize an interesting opportunity which is offered to you without having sold or finished paying your current accommodation yet?
Reselling without having finished paying off your loan is a possible operation and more widespread than you might think. But this is not without certain constraints and other precautions to be taken. To know and master all the subtleties, it’s here!
Resell without acquiring another property
To fully repay your property once it has been sold, your notary will send the balance of the loan to your bank. Please note, even if the amount is correct, remember that the contract you signed with your bank includes the payment of an early repayment indemnity or IRA, that is to say additional costs. And to compensate for the interest that you will no longer pay him later, compensation is in his favor.
In the case of a fixed rate loan, your bank will ask you maximum
six months of interest, which can represent up to 3% of the remaining capital to be reimbursed. In the case of an adjustable rate loan, these penalties are higher and are mentioned in the contract that you signed beforehand.
Namely: if your loan was issued before July 1, 1999, the allowance can be avoided in three specific cases: if you sold your property in case of unemployment, death (or your spouse) or job transfer.
Sell to buy a new property
Even if you previously sold your old home, the most common solution is to take out a bridging loan to deal with any cash flow problem because, unless you already have a promise to sell in hand, the purpose of the transaction remains uncertain. The principle of the bridging loan then consists of receiving from your bank between 60 and 80% of the price of the property for sale, with an interest rate higher than that of conventional credit.
This “facility” generally extends over a period of one year, or even two years at most. Obviously, once you have sold your old acquisition, you will be required to repay the capital slow to your bank throughout the two transactions.
To know: if the banks never lend 100% of the value of the good which is put on the sale, it is for the simple and good reason that the lending organization assumes that the sellers often resell cheaper than the price expected at the start, negotiations are very often required.
This also helps limit the risks to your establishment. On the other hand, with a formal promise to sell and with the precise indication of the sale price, the financing of your credit can reach 90% of the value of your property.
And you, have you experienced this situation? Do you find the operation risky or, on the contrary, advantageous? Let us know your experience and your advice, the blog is there for that!