Relocation Mortgage Loan
A relocation loan is a short-term loan, usually with a 12-month term. It is designed to help individuals buy or build a new home while they wait for their current one to sell. If your client is in the process of selling their home, either because they are relocating for a job or because they want to build a new home, they may qualify for a relocation loan. However, there are some pros and cons you should go over with them.
Pros
- Once your client finds a property, they don’t have to wait to purchase it. If they have been approved for a relocation loan, they can buy the home immediately.
- Your client may be able to wait to sell their current home until they receive the best price.
- During the 12-month relocation loan term, they don’t have to make repayments except for their existing mortgage.
- Relocation home loans have the exact fees and interest rates as standard home loans. In addition, your client does not have to pay a discharge fee if they see their home early.
- The biggest pro associated with relocation loans is that your client does not have to pay moving fees twice or pay 12-months of rent, which saves them money.
Cons
- Like traditional home loans, the interest on relocation loans compounds monthly, meaning that the longer it takes your client to sell their current home and repay the loan, the more interest they are charged.
- The bank will need to perform two property valuations. One on your client’s old home and one on their new home, meaning they may have to pay two valuation fees.
- If for some reason, your client cannot sell their old home by the end of the loan term, their lender could charge them a higher interest rate until they sell their home. Your client may also need to start making repayments while they still pay their current mortgage.
- Your client may have to pay early termination fees if they decide to refinance their loans and switch to a different lender.
- The biggest pro associated with relocation loans is that your client does not have to pay moving fees twice or pay 12-months of rent, which saves them money.
If your client is in the process of purchasing or building a new home and hasn’t yet sold their old one, we may be able to help. As a non-bank lender, Mortgage Street can secure home loans for your client that may be more competitive than those offered by traditional lenders.