Bridging mortgages on Curaçao
Found your dream home on Curaçao but not sold your current home yet?
A bridging mortgage helps you bridge the period between the purchase of your new home and the sale of your old home in Curaçao. Read more about this special mortgage type below:
What is a bridging mortgage?
A bridging mortgage bridges the gap between buying a new home and selling your old home. During this period you cannot yet pay off the mortgage on your old house. At the same time, you must take out a mortgage for your new home. So you have to borrow more and that results in higher lunar costs.
A bridging mortgage in Curaçao is usually not included in the assessment for the maximum mortgage, so that you can borrow more. In addition, a bridging mortgage offers the possibility to withdraw the equity of your old home in order to (partly) finance the new home. As a result, your monthly costs will rise less rapidly during this period.
When you have sold your old house, you immediately repay the bridging loan and it is transferred to a new (regular) mortgage.
Mortgage interest in a bridging mortgage
With a bridging mortgage you only pay mortgage interest. This is because it is an interest-only mortgage type. However, the interest is usually slightly higher than with the regular mortgage interest. The bank runs a greater risk that if something goes wrong, the mortgage cannot be repaid.
The bridging mortgage is taken out in combination with a regular mortgage. The interest is then determined by means of a surcharge on top of the regular mortgage interest. If you have repaid the old mortgage, the interest surcharge expires and you pay the regular mortgage interest.
Tip: the interest for a bridging mortgage is tax deductible!
Bridging mortgage costs
With a bridging mortgage in Curaçao you therefore pay extra costs, but you do not pay for two full mortgages. This is because the equity in your old home can be used for the new mortgage. The equity is already advanced by the bank, so that you do not have to finance this amount. This keeps the costs of temporarily two houses under control.
In addition, you must take into account the costs for taking out a new mortgage, such as advice and brokerage costs, appraisal costs and costs for the notary.
When you temporarily have two mortgages, this entails uncertainty in addition to additional costs. You are advised to consult a mortgage adviser and list the options. The mortgage adviser can make all costs transparent for you so that you know where you stand.
Conditions for bridging mortgage
A bridging mortgage in Curaçao usually has a number of special conditions compared to a regular mortgage.
- The term is a maximum of two years.
- You can repay without penalty.
- You do not pay any repayment, only mortgage interest.
- Mortgage interest deduction is possible.
Due to favorable conditions of a bridging mortgage on Curaçao, your monthly costs will only increase to a limited extent.
Advantages Bridging mortgage
- Collects double mortgage and extra costs.
- No interim repayment.
- Favorable conditions of repayment: at any time and without penalty.
Disadvantages Bridging mortgage
- Monthly charges are getting higher.
- Chance of a residual debt if the house is not sold within two years.
This article was written by Adriaan Smit & a sales broker in Curaçao.
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