I Already Have a Mortgage, But I Want to Move to a New House. What Should I Do?
Do you already have a mortgage but are thinking about moving to a new house? Indeed, many people find themselves in this situation, which can bring a lot of uncertainty and questions about how to proceed.
According to recent data from the Bank of Portugal, the number of housing loan applications has increased in recent years. Many of these applications are related to home swaps for various reasons, such as changes in the workplace, family growth, among others.
The solution to this problem may lie in the Home Swap Loan. What it is and how to proceed is what we’ll explore next…
Home Swap Loan: What Is It?
Before we dive into the details of the Home Swap Loan, it’s important to understand what it means.
Basically, a Home Swap Loan is a line of credit for those who already have a mortgage and want to start the process of moving to a new house before settling their current mortgage.
This type of loan is especially useful for those who intend to buy a new house but do not want to wait for the sale of their current home.
How Can You Obtain a Home Swap Loan?
To obtain a Home Swap Loan, you need to contact your bank or another financial institution that offers this type of credit.
It’s important to be well-informed about the conditions offered by each institution, as well as the fees and charges associated with applying for this loan.
Financial institutions commonly charge fees for opening the loan, property appraisal, and more. It is also important to compare different offers before making a decision. Note that you can only access this option if you:
- Are not in default on your current mortgage or any other credit product registered with the Bank of Portugal;
- Maintain a debt-to-income ratio below 30% after increasing the capital;
- Demonstrate financial ability to support the new expense, particularly through your professional situation.
Pros and Cons of a Home Swap Loan
Like any other type of credit, a Home Swap Loan has pros and cons that should be considered before making a decision, such as:
Pros of a Home Swap Loan:
- Possibility of moving to a new house without having to settle the current mortgage;
- Allows you to continue paying installments on the current mortgage while starting to pay installments on the new loan;
- Flexibility to transition between properties without interrupting mortgage payments.
Cons of a Home Swap Loan:
- Fees and charges may be higher compared to a conventional mortgage.
- The loan repayment term may be longer, resulting in higher interest.
It’s important to remember that before making any decision, you should thoroughly research the conditions offered by each financial institution, as well as the fees and charges associated with applying for this loan. Additionally, it’s crucial to crunch the numbers and verify if this is truly the best option for you.
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