The buyer of the new house found awkward positions when they incapable to come up with the down payment for the account of the present home not are being sold sooner the closing of the new home buying. This put them in the condition of jeopardy to buying the modern home. To come out form this position the buyer could utilize the bridge loan against the equity of the existing house. The larger the equity of the house the larger would be the amount of loan. The loan could be settled when the existing house is sold.
The purpose for which reason the bridge loan is to be taken and the time period normally for the short period of time form 6 months to 1 year to be consider. It has found that the interest rate and the fees for getting home mortgage loan are relatively higher than other kind of loan because for the short nature of the loan. You don’t require paying the interest until you sold your existing house. On the selling of home the principal amount and the accrued interest could be repaid by using the proceeds form the sale. It should be noted that the profit form the sale of the house is to be reduced in such an extent so that the fees paid to carry the home bridge loan and interest paid on the loan.
The strategy for Home Bridge Loan:
- Borrow the money only against the current home. The loan could be acquired on the equity of your existing house.
- As the interest given on the home bridge loan is completely tax deductible, assure that you must claim the amount of money in your tax return.
- Make sure that there is a clause in the contract of the loan which would allow you to extent the loan term if required.
- You must also see in the loan contract that there is no penalty clause in it.