A Detailed Guide to Buy-to-Sell Mortgage
Looking for an affordable way to upgrade your property, a buy-to-sell mortgage should be the perfect option for you.
Buy-to-sell mortgages are homeowner loans that allow you to buy a new property, sell your existing one, and move in with a limited budget. In other words, they are an ideal option for homeowners who need the equity from their existing buy-to-sell property to cover the shortfall in purchasing a new home.
Thanks to Gosen Properties, you can get your hands on some of the best, exclusive, and most profitable property deals for your buy-to-sell mortgage. With that said, let's discover more about this type of mortgage and what it covers.
What is a Buy-to-Sell Mortgage?
As the name says, a buy-to-sell mortgage helps buy a new property by selling the existing one.
This type of mortgage allows homeowners to take advantage of rising property prices by moving into a new home while they still have equity in their current home.
According to forecasts, the US real estate market has marked up to 443,707 new listings despite increasing home prices yearly.
Hence, buy-to-sell mortgages are a win-win situation for both sides when done with smartness. A buy-to-sell mortgage is often used for a property rented or bought for an average of 1-12 months, requiring a minimum 20-25% deposit.
How to get a buy-to-sell mortgage?
To opt for a buy-to-sell mortgage, you need to find a responsible lender who will offer the right deal based on your needs and goals.
The lender will then arrange for you to sell your existing home and purchase the new one. You can take a cash advance from the seller or use your funds to complete both transactions. Once done, you'll need to sign a new mortgage with your lender that reflects the amount of money left on your current property's loan.
Due to less competition in buy-to-sell mortgages, over 63% of homeowners and seasonal investors have their feet in the mortgage industry.
How does buy-to-sell mortgage work?
As said earlier, a buy-to-sell mortgage is a flexible way to finance your home purchase. It allows you to use the equity in your existing property as security for the shortfall on any new buy-to-sell property you want to buy.
Usually, it involves selling one buy-to-sell property and buying another with the help of two mortgages for each transaction. As a result, the mortgages will cover both purchases, so there's no need for any upfront money from either buyer or seller.
The best part about getting a buy-to-sell mortgage is that you don't have to wait to move into your new place until you've paid the first mortgage.
Many borrowers believe this type of mortgage is more flexible than a traditional mortgage as it allows you to decide where and when to use your home equity. Also, it doesn't require any additional fees or hidden closing costs beyond what's already listed in the purchase agreement. The only restriction would be the amount you can borrow from the lender.
Are buy-to-sell mortgages the same as traditional mortgages?
No, they're not the same. Buy-to-sell mortgages are comparatively more expensive than traditional mortgages.
For example, a buyer approved for an 80% loan-to-value (LTV) would pay a 2% rate on the purchase. In this case, the buyer would have paid $100 in interest over the life of their loan if they financed it at 5%. To get that same rate with an 80% LTV would cost the buyer $110 per month in interest payments instead of $100, as lenders charge more when you borrow money under these circumstances.
However, if you're buying a home to sell later, this type of mortgage can be an attractive option too. Whatever the case, you may still need to pay closing costs, but it will be less than refinance into a new loan at a lower rate.
Can I Get A Buy-to-sell Mortgage?
This mortgage may work well for you if you have a buy-to-sell property and want to diversify your investment portfolio. First, you take out a new mortgage on your existing property.
Once you've sold your old home, use the proceeds of the sale to pay off the existing mortgage.
However, you can also use the equity from your old buy-to-sell property to buy a new one or repair and renovation costs. In case you're still in the process of finding a property, look nowhere than Gosen Properties to find a dedicated team of real estate agents to reap the best property deals in no time.
Conclusion
Buying-to-sell mortgage loans are a great way to get the equity you need without using an expensive cash-out home loan. These mortgages are designed specifically for homeowners who want to buy a new property without compromising on other essential expenses.
If this has convinced you to it for a buy-to-sell mortgage, make sure to do your share of research to land on the right lender and best mortgage offer.