12th February 2018

Buy first and sell second

Charles Pletsch, deputy head of Spuerkeess’s Coordination du Réseau des Agences, talks about the bridge loan, a short-term loan that can ease the transition when moving from an old home to a new one.

What is a bridge loan?

As the name implies, the bridge loan, allows a home owner who decides to buy or build a new home to obtain an advance in funds until the sale of his or her existing home is complete.

It is therefore a transitional loan established for a short period of time (between 12 and 18 months) at a variable rate. In general, the holder of the loan only pays the interest, since the principal will be repaid by the proceeds of the sale of the old home.

The bridge loan is therefore a flexible and practical solution in the event that an owner wishes to stay in his or her house or apartment until he or she has sold the current property to finance the new one. The alternative to the bridge loan would be to rent a home until the new home is ready or the construction of the new property is complete.

The bridge loan is your solution if you wish to stay in your current home while you start financing your new one.
Charles Pletsch - loan expert

What are the terms for obtaining this loan?

The conditions for obtaining the bridge loan are identical to those for a conventional home loan. When a client wants to buy or build a property, the bridge loan is indeed an integral part of the bank's proposed financing plan. The customer therefore takes out the principal loan as well as the bridge loan and must be able to bear the monthly expenses of both.

In general, the home loan is normally repaid (interest and principal) while for the bridge loan, only the interest is repaid monthly. The principal of the latter will be repaid after a period of 12 to 18 months, once the sale of the existing property is completed.

What is the bank's role?

Each housing situation is unique and requires personalised advice, especially when it comes to establishing a bridge loan. The bank will help the customer set a realistic selling price in order to set up the financing plan. The amount of the bridge loan, which often represents a large percentage of the value of the property, is calculated using the following equation:

Sample calculation
Calculation formula Sample figure
estimated selling price EUR 400.000
balance of bank loan due EUR 100.000
real estate agency fees EUR 12.000
state aid /
= bridge loan amount EUR 288.000 (72% of property value)

If there are any concerns, for example if the property has not been sold at the end of the bridge loan, the bank will try, together with the customer, to understand the problem and quickly find a solution.

Do you have any further questions regarding your new home? The story of your future home starts with us!

Are you planning to build, buy or renovate/refurbish a home? Such a project is a considerable investment that requires careful preparation and a trustworthy financial partner. Depending on the nature of your project and on your personal situation, various financing solutions are open to you. Our advisors are at your disposal to develop, with you, a tailor-made financing plan perfectly suited to your needs. (English version coming soon)

Download our guide to housing loans or make an appointment with one of our advisors.

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