Intermediate financing
– When you want to buy a new home before you have sold the old one.
Security in the home you are going to sell
What is intermediate financing? You often need interim financing when you are going to buy a new home before you have sold the old one. Interim financing is capital you have left over in the home you are going to sell.
Many people choose to buy their dream home before they have sold their current home, others may not be able to sell the home as easily as they had thought. This leaves you with two homes for a short period of time. Then we can help you with so-called intermediate financing/bridge loan, which is in addition to any loan on an existing home. The brigde financing is installment-free, so that the financial burden does not become too great. The most common is that you get bridge financing with a term of 6 months, where you only pay interest on this loan. If you have not been able to sell within 6 months, the bridge financing will be extended.
When can you use intermediate financing?
- When you want to buy a new home before selling the one you live in now
- When you have sold a home and are going to buy a new home, but have not yet received settlement for the sold home. Some people choose to postpone the takeover for quite some time so that they have plenty of time to find a new home.
Frequently asked questions about interim financing:
Interim financing means that the bank lends enough money for you to be able to own two homes at the same time for a shorter period. During the interim financing period, you have two parallel loans – an interim financing loan that covers the new loan requirement, and the old mortgage.
Usually, the interim financing loan is interest-free and has a term of up to 12 months. This means that you can own two homes for up to a year. When you receive the settlement for the home you have sold, the interim financing is paid back. On the new ordinary home loan, the bank receives security in the new home.
Interim financing is usually a little more expensive than a normal mortgage, but you are only charged for interest on this loan during the period you have it. As soon as you have received a settlement for the sale of your old home, the interim financing loan is repaid.
Interim financing is an additional loan during the period when you possibly own two homes at the same time. The loan is secured by a home.
Interim financing is used, for example, in the period from when you have bought a home, until you have sold your own home. Choose whether to count on the number of days, weeks or months. You then enter the interest rate, length and establishment fee.
Interim financing is a mortgage with security in the home you are going to sell, i.e. the one you are moving from. You then get to move the equity that is locked in the home to the new home you buy – before you have sold your old one. Usually, the interim financing loan is interest-free and has a term of up to 6 months.
You can get up to 85% of the vacant value in both homes minus existing debt, sales costs and expected accrued interest. Therefore; If you have a home worth 5 million with 3 million in debt and buy a new home for 5 million, you can offer security for a total of 10 million. 85% of this is 8.5 million minus debt of 3 million and sales costs + purchase costs, approx. 250,000. Then there remains approx. 5,250,000 which you can get in interim financing. This is a very simplified calculation, but a good indicator.
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How long can you have interim financing and own two homes?
Bridge financing/intermediate financing usually has a term of up to six months, with the possibility of a few months’ extension. This means that you can own two homes for up to approx. half a year. When you or the broker receive the settlement for the home you have sold, the bridge loan is paid back to the bank. On the new ordinary home loan, the bank receives security in the new home.
Having to live with two homes initially sounds prohibitively expensive. If, for example, the new home is bought for four million, and the old one has a loan of three million, you have a debt of seven million in this phase. But the expenses don’t have to be as high as it might first sound, as the bridge loan is intstallment-free. If the loan on an existing home has collateral within 60%, this loan can also be made installment-free during the sale period.
The cost of the bridge loan will therefore not overturn the load, even if you have a large loan during this period. It is what you ultimately get to sell your home for, which has the most to say for the economy going forward.
How much can you borrow?
The rate (takst), valuation or sale price of your current home is used as a basis for calculating how much you can get in bridge financing/intermediate financing, then the existing mortgage and brokerage costs are deducted. Total debt and security must then be below 85% of the total value of both homes.
If you have already sold a home, but have not handed it over to a new owner before you take over your new home yourself, the bank can calculate up to 100% of the value of the home. This means that you can borrow 100% of your tied-up equity, minus the current loan and broker’s cost.
What is a transport declaration?
If you have sold your existing home and bought a new home, but have still not received the settlement for the sale, bridge financing/intermediate financing may be necessary. In this context, the bank can advance the equity you have earned in your sold home. This requires you to sign a transport declaration.
The transport declaration means that you approve the broker transferring the equity to the bank when the settlement for the sale is complete.
Loan example:
An intermediate financing loan of 1,000,000 million with eff. interest rate of 7.79%, over 6 months will have an interest cost of approx. 38.763,-. A total of NOK 1,038,763. Included here is an establishment fee of NOK 2,000 and a monthly fee of NOK 45,-. Interest nom. 7.40%/ eff. 7,79%.
Read more about 2. priority loan here
Read more about loans for secondary housing here
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If you already own a home, we can help you estimate its value, and assist you with tips on a skilled estate agent in your area. For the fastest possible case processing, attach the latest tax return, recent payslip, valuation, FINN code and any other relevant documentation.
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