Many individuals or families who already have a foreclosed home, have a need to change their residence. It may be, for example, because they need a bigger house when the family expands. Or because they need to move for work reasons. Or switch to a better home.

But as we all know, a house not be bought or sold in the overnight. When selling, do not rush, and we must try to get the highest price possible. And the house which we move will often be new and acquired work on the developer level, and therefore is not finished (and sometimes not start). Although we can also buy a used house.
How have the money to buy a new home without having sold the current home?

Most financial and credit institutions offer their customers products called Construction Financing, Bridge Loan, Mortgage Exchange Home and other similar names. The operation of these products is generally similar, with the peculiarities that may have each entity.

Basically, it lends money to cover the cost of re-purchase (or reserve entry, transfer, notary and registration for signature, etc..) Mortgage in exchange for the two properties. How many times have not yet signed the new purchase, the loan is generally personal to become, at the time of signing a mortgage.

The bank will give a maximum period for us to sell the current property since it gives us credit (may be 24 months, 36 …). During this period we will pay only interest or extending reduced rates to sell the old property.

Another method is that the bank gives you a new mortgage (mortgage also provided that the old property) and in the transition period until the sale of previous housing only pay the new mortgage. Once sold, this second mortgage increases your interest or fees to compensate for the loss suffered by the entity for not paying the old mortgage during the transition time.

Each entity, as mentioned, has its peculiarities in this type of product (about finance up to 100% of new housing, some not, some offer longer terms, other children etc.), So it will suit us particularly collect offers from several banks and savings and compare and negotiate properly to get the lowest possible cost or the best conditions.

In this sense, we must ensure that the transition period is long enough to achieve the intended purpose, namely that we will not burdened by the need to sell. Moreover, we should not be taxed by the commission done to shorten the transition period if we sign the new deed earlier than expected.
Advantages of bridging loans

In short, this type of product offers several benefits for people who want to move house. First, allow selling without haste, and therefore do not undersell. And in turn, allows you to purchase a house without selling the previous one, so we do not lose opportunities to buy the house you want and save us from future price increases (the seller is not expected to sell to give money ).
Disadvantages of bridging loans

But it can also have drawbacks, because having to mortgage the two properties, incur double expenses for notarial, registration, taxes, etc.. Moreover, we do good numbers, to ensure that future financial situation with the new credit will be manageable.

In any case it seems the perfect product for home without seeing change prompted by the rush to sell and buy.

Until recent years, credit institutions were often not given quantities beyond 80% of the appraised value of housing that he wanted to buy. But the rising price of housing has been more and more people need more of that 80%.

Moreover, household savings has declined, so that few people will have in their coffers with the remaining 20%. To which will be added expenses and taxes.

Although by definition have a mortgage as collateral the property acquired with it, banks do not want to stay in the homes of those unable to pay if they can avoid. Your profit is in charge interest as long as possible. By law, mortgages of up to 80% of appraised value will not be affected by other security than the same property.
When asked for a loan worth more than 80% of the appraised value of housing

But the circumstances previously mentioned, many people are forced to order more than 80% of the appraised value to meet the payment of housing and the costs associated with their purchase as well as furniture, appliances, etc..

In these cases, institutions ask for a guarantor to respond with their property (collateral) if the owner has not replied to credit payments. This is supposed to involve family or friends in an embarrassing situation for both. Also someone buying a second home may be required to attest that the first new acquisition.

But there are people who have no previous possessions and have no relatives or trusted people in the country that serve as guarantors, even in situations of economic solvency. This makes a lot of people could not access the purchase of a home and what banks also lost important business niche.
Unsecured mortgages over 80% of the appraised value to acquire housing

Thus, organizations can give no guarantee mortgages even if more than 80% of the appraised value of the house to buy. In fact, tend to arrive even at 120% of that value.

In return, organizations require the customer to take out insurance to cover the unpaid dues. Thus, monthly payments will consist of three added: principal, interest and insurance. This may adversely affect our future solvency level, because in exchange for not presenting guarantors will face a significant increase of quotas for the amount of insurance. Therefore the repayment terms are broad, up to 40 years, which makes payments more affordable and offset by rising insurance costs. And also this extension in time makes the operation profitable for the institution.

But there is often no guarantee mortgages as specific products widespread in all entities. Rather, individual cases are studied and their characteristics. Because even with insurance and property as collateral, banks grant loans only if they believe that his client maintains a certain level of solvency.

For example, as a rule, do not grant mortgages whose rates exceed 30% resulting from customer’s monthly income. And taking into account other loans that may be paying (car, cards, etc.).. Furthermore, it may impose certain conditions, including that the client has official or permanent contract in a medium or large, etc. If the conditions itself to mortgages tend to be stricter in the case of mortgages are usually unsecured him even more.

In any case, the usual practice of banks is to apply (rather require) a guarantor for transactions over 80% of the appraised value, rather than establish a mortgage without a guarantor but assured.

In recent years, the housing market in Spain has seen spectacular growth, both in terms of homes built from the data as selling new and used homes. This large increase was reflected in a large increase in the number of mortgage loans requested and granted. Credit institutions, and have seen their profit rates reflected significant growth.

But with the slowdown in sales due to economic uncertainty, the high housing prices and the oversupply of housing, there has also been a drop in the number of mortgage applications.

Banking institutions in order to achieve its objectives in terms of volume of loans, are forced to adopt new strategies to attract customers in a market where they are not as abundant. How? For taking away clients from competitors. If there are no new customers, because that will convince those who are already in the mortgage market for transferring their mortgage to our organization: it is what is called subrogation of mortgage.

This war between the entities to win customers, can be beneficial for consumers since the entities will offer more favorable terms for new mortgages which they had before. On the one hand, some banks offer commission-free mortgages (cancellation, subrogation, etc..), More favorable interest (from 0.20 to EURIBOR + EURIBOR + 0.35), including financial compensation that may be a percentage of total mortgage (1% – 2%) or a fixed amount (about 600 €). They also tend to offer the possibility of extending the repayment periods up to 35 or 40 years for monthly payments are lower.

Of course, that such generosity by the bank as payment on our affiliation must have their services counterparts. Nearly all organizations want to go on to become loyal customers and our products contracted relationship is not limited to the mortgage. Therefore, mortgage recruiting often will influence the simultaneous recruitment of life insurance and home associations, the domicile of our payroll, the clearance of a number of receipts, etc..
When I agree then take the step of changing my mortgage entity?

Clearly, as we always recommend, the main thing is to study carefully the multiple offers, come to many entities or information on the Internet. Then necessary to assess the options and decide upon several criteria:

1. first, to assess the total savings that we achieve over the life of the mortgage (provided that we maintain a period not greater than before).
2. also assess whether though not total cost savings, we can obtain longer periods for repayment at ease to go every month (if we have this problem, we should extend the repayment period, because it ends up paying considerably more).
3. weigh the cons, such as subrogation and cancellation fees, notarial costs of the new mortgage, or insurance already paid to the other entity that will be lost.

In summary

We can say that it is possible to save much money if we can find an attractive offer and we negotiate well, never forgetting that in this type of business entity exchange of mortgages, it is these that are very interested in having us as customers .

That force must know how to use it to obtain better conditions for our mortgage lending and reduce our expenses and future.

One option could be interesting negotiation would submit to the director of our agency a concrete offer and agreed with another entity better than we have now, for us to improve the conditions if you want to continue having us as customers.