Moving is no easy task; not only are there tons of things you have to do, but it also involves numerous expenses that can total up to a considerable amount. Plus, when you are buying a new property when your old one is not sold yet, it can require some major money. How do you get your hands on that much finance? This is where you can consider getting a loan for relocation. Relocation loans are becoming very popular in such situations as they allow you to get the funds you need for purchasing the new property by keeping both properties as collateral.
When you succeed in selling your old property, you can either pay off the relocation loan or reduce it so it becomes the residual mortgage. The purpose of the loan is to bridge the time between settlements and uses your equity in the existing property thereby giving you some breathing room and flexibility to move as quickly as possible. Due to the role they play, relocation loans are also called ‘bridging finance’, but the term is not preferred as such loans were very expensive at one time and had very high interest rates. However, there are companies, such as Peerform, which can offer a good solution.
The modern day relocation loans are more appealing in contrast because they have reasonable interest rates or even low rates because you are giving your property as collateral. Generally, a loan for relocation allows you a bridging period of six to twelve months, but this can vary for every institution. During this period, interest rate is charged on the full mortgage, but repayments are calculated according to the anticipated residual mortgage. At the time of settlement, you have to pay the unpaid interest and the loan is then paid in full or reduced to the residual mortgage. These loans are usually appealing when good properties are not available for sale.
People are unwilling to sell their homes because they are unable to find a suitable alternative to purchase, especially when prices are rising. Relocation loans become a good option when you have substantial equity in your property. One of the most notable and attractive features of relocation loans is that affordability calculations are usually made by institutions on residual mortgage. This can benefit you because you have the option of qualifying without income if no residual mortgage is left after settlement. Nonetheless, when you are thinking of getting a loan for relocation, it is essential that you always take a realistic approach for valuing the property you wish to sell.
You should bear in mind that the longer you take to sell, the more interest will be accumulated on your relocation loan. Thus, these loans are a huge advantage when they are used appropriately. They could be a very viable option when you are realistic about the property value and make a solid residual mortgage repayment. As long as you consider the ins and outs, you can apply for relocation loan and eliminate your worries of getting the finance to move to a new place.