The integrated bridging loan: a solution adapted to your situation?

What is the integrated bridging loan?

After finding a new property to buy, you would surely like to finance it by reselling your principal residence. Although this practice is common, it is unfortunately complex. Indeed, it is not easy to match the dates of the two operations. Putting the accommodation up for sale, signing the compromise and the deed of sale, obtaining a loan, organizing the move… Time requirements are difficult to meet. The decision must be made quickly, otherwise the opportunity will be missed. Of course, it is not recommended to sell off the current home. The integrated bridging loan intervenes at this level.

What are the advantages of the integrated bridging loan?

You wonder what is the interest of the integrated bridging loan for your real estate project ? Some banking organizations do not distinguish between the main loan and the bridging loan. They then propose a global, long-term contract. This option covers the entire transaction and corresponds to the amount required to purchase the new property. It seduces for its flexibility and practicality. It does not impose a deadline to sell the residence which will finance the purchase of the next one. However, it implies the immediate repayment of the capital.

From the outset, you will pay the installments of a conventional loan. Once the sale is effective, you will repay part of the credit in advance (without any penalty). According to the contractual terms, the bank will modify the loan (to reduce the remaining term or lower the monthly payments).

Thanks to the integrated bridging loan, you will avoid the constraints linked to a double move. Between the finalization of the sale of your house and the purchase of the next one, there is no need to resort to renting. You will not assume the financial burden of owning two dwellings at the same time (maintenance costs, property taxes, etc.).

What is the amount, duration and interest rate of the integrated bridging loan?

The amount of this credit varies between 50 and 80% of the value of the accommodation. Said value is determined by a competent real estate agent. Because of the importance of this step, do not neglect it. In case of overestimation, the transaction could be delayed. To benefit from a substantial advance, present a synallagmatic promise of sale to the bank. The geographical area and the characteristics of the property (architecture, surface, etc.) will be studied.

In terms of duration, the integrated bridging loan is depreciable and long-term. For its part, the interest rate varies according to the borrower profile and the lending institution. It dictates the monthly payments to be paid before the expiry of the contract. Most often, it is higher by 0,1 to 0,3% compared to that of a conventional mortgage. For information, it was 1,1% in 2019.

The rate of attrition has, in turn, been ruled by law (because of multiple abuses). The Banque de France reviews it and sets a ceiling on a quarterly basis. For the first quarter of 2020, it was 2,92%.

What is the cost of the integrated bridging loan?

It corresponds to the amount of interest on the loan. Its calculation is almost identical to that of the classic loan with deferred. It depends on the value of the house or apartment for sale and the terms of a contract. Negotiation with the funding body also plays a crucial role.

Perform a simulation of a traditional loan and an early repayment.

Is the subscription of an insurance compulsory?

Even if borrower insurance is not compulsory, several banks require it. They condition the granting of the integrated bridging loan to the subscription of a cover. The choice of insurer is up to you and the guarantees are flexible (total and irreversible loss of autonomy, death, permanent disability, etc.). Protection against temporary or total incapacity for work is sometimes integrated.

Are there any aids?

The Action Logement loan can be combined with the integrated bridging loan. To benefit from it, you must be an employee of a company of at least 10 people. This aid is generally granted in the context of a change of main residence (for example, during a professional transfer).

In addition, note that the integrated bridging loan is eligible for credit consolidation. Anyway, do not forget that a loan commits you. Prepare the project carefully beforehand, in order to put the odds on your side. If you have any concerns, contact a real estate broker or bank advisor.

Illustrative image of the article via Depositphotos.com.