What is bridge home loan? How to get it?
A Bridge Loan is essentially a short-term loan that gives you the money to make down payment for your new house before you get the funds from the sale of your old house. Banks usually extend a one year window to their Bridge Home Loan customers to repay the amount.
The eligibility and documentation requirements to avail a Bridge Home Loan are similar to those of a regular Home Loan.
Banks offer Bridge Loans to customers only after entering into a formal agreement with them pertaining to the sale of the borrower’s property. In case there is no formal agreement to sell the existing property, banks usually offer a six month to one year window to sell the property and repay the loan. The maximum repayment tenure for Bridge Loans is two years.
On the one hand, Bridge Home Loans buy borrowers time to sell their existing property, and on the other hand, it equips them with funds to make down payment towards the purchase of their new house.
In case the borrower is unable to sell the property within the stipulated period, banks usually convert the Bridge Loan to a simple mortgage loan. Post conversion, banks keep the old property as mortgage and convert the Bridge Loan to a regular Home Loan with a higher rate of interest.
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