RELOCATION LOANS – I don’t want to move to sell…
It can be a complicated process, working out the right steps to move out of your existing property (which needs to be sold first) and into a new place (which can take 3-6 months to build). There is also the problem of having to rent out a place if you need to sell your place first and then the cost of moving house twice, not to mention the stress of organising each step.
Relocation loans can be a very practical way to plan for the shift between your old home and your newly built home, without having to move out of your home at all.
Essentially the lender will work out the entire cost involved in buying your new home as well as factoring in your existing home loan debt during the build period (Peak debt). They will also work out estimated selling price for your existing home and what end debt you will be left with after your home is sold.
The difference is called the capitalising loan amount, which is the estimated amount which will be paid out after the sale of your house.
The end debt and the capitalising debt will be set up as two loan amounts. The end debt you will pay off as any normal loan. The capitalising debt will just sit there gaining interest until your first home is sold.
The proceeds from sale will go towards the capitalising debt, leaving you the end debt.