It is possible that you have bought a new house but have not yet sold your old house. In that case, you actually do not have enough money to buy the new house, because the old house has not yet been sold. In this case it is not very useful to take out a second mortgage for the new house.
This is not handy because firstly it is very expensive to have two mortgages. Secondly, if you suddenly have enough money to buy the new house (because the old house has been sold), the second mortgage can often not be repaid immediately and without penalty. You are left with a bag of money and a mortgage, something that is often not desired.
A commonly used solution is a bridging mortgage.
A bridging mortgage ensures that you can buy the new house while the old house is still for sale. If the old house is then sold, the bridge mortgage can be repaid immediately.
The bridging mortgage is there to literally bridge the time between the purchase of the new house and the sale of the old house. This time is of course variable because you do not know exactly when and at what price the old house will be sold. A bridging mortgage is nevertheless taken out for a fixed period of, for example, six months.
Do you want to extend this bridging mortgage? This costs a relatively large amount of money, and it often happens that the interest is then increased. This is because if you take out a bridging mortgage, you give the bank a guarantee that the old house was sold in a certain period. If that turns out not to be the case, the bank may decide that the risk of default has increased. A logical consequence is a higher interest rate.
A financial product costs money. A bridging mortgage also costs money. How much money can be calculated. You can calculate a bridging mortgage by looking at the value of the old house.
Calculating a bridge mortgage is important to save yourself nasty surprises after selling the house. Because a bridging mortgage also costs money. You can see a bridging mortgage as a normal mortgage, which has to be paid just like the mortgage of the old house. You must therefore include the costs of the bridging mortgage in your monthly expenses.
Parent-child mortgage a starter mortgage for children together with the parents
You leave the parental home and want to move into a owner-occupied home together with your partner. Then you can help parents to make that possible with a parent-child mortgage.
By the time their children are adults and are ready to live on their own, most parents have their finances in such good order that they have considerable financial strength in the eyes of banks and other financiers. Especially when these parents themselves have a house for sale and have surplus value on it. This financial strength can be useful if they want to help their children on their way to purchase a house for sale.
Banks and financiers would like to provide start-ups with a mortgage, but understandably would like to have enough security to be able to provide newcomers to the housing market with mortgages. The more certainty a bank or financier has, the more certain it is that a suitable mortgage is possible for the applicant.
Parents can help their starting children in several ways. For example, by applying for a mortgage with their children. Parents then guarantee their children because, for example, they use the surplus value of their own home to get the financing of their children’s home.
In addition, parents can of course also make a donation to their children, so that part of the mortgage has already been paid.
Would you like to take out a parent-child mortgage together with your parents or together with your children? Remember that you are often more expensive at the regular banks than at the various lenders who also offer parent-child mortgages. With the interest in saving and good advice in mind, I therefore recommend that you first inquire with various financiers.