While many owners use bridging loans to be able to sell their property more easily, they face certain difficulties when having to repay the capital lent by the banking establishment. Explanations.
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– Interest rates on home loans have increased in recent years.
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The real estate market is slowing down and borrowers are learning this the hard way. Indeed, this is particularly the case for owners who resort to to the bridging loan. If you don’t know what it is, it consists of a type of real estate loan that allows you to obtain an advance on the sale price of your apartment or his house to be able to buy his new home. But after a period of time, it is imperative to transfer your property to repay the capital lent by the bank. And it’s not at all easy.
At first glance, the bridging loan constitutes the ideal solution for buying real estate while waiting to sell your home. Before selling it, borrowers only pay interest and insurance. But this bridging loan cannot be kept for a discontinuous period. Borrowers are obliged to repay the amount loaned to the bank at the latest on the due date, that is to say they must sell their property before the date stipulated in the loan contract. They have, in general, one or even two years to do it.
Also read: Real estate loan: at what rates can you obtain a bridging loan?
An increase in bridging loans
So, home loan interest rates have increased considerably in recent years, and buyers are struggling to show up. As a result, the real estate market has much lower activity than usual and real estate sales are taking longer. “There is an extension of sales times”confides Sandrine Allonier, spokesperson for the broker Vousfinancer, to Ouest-France. If borrowers are reluctant to lower the price of their propertythey are often forced to do so to allow their property to leave on time.
However, despite the difficulties bridging loan borrowers may face, banks don’t plan to stop to regularly offer this type of financing. According to data from the Banque de France from June 2024, the proportion of bridging loans within credit production is increasing, “between 6% and 8%”.
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