Found your dream home in Curaçao, but your current property hasn’t sold yet?
A bridging mortgage helps you bridge the period between purchasing your new home and selling your old home in Curaçao. Read more below about this special type of mortgage.

What is a bridging mortgage?

A bridging mortgage bridges the period between buying a new home and selling your existing one. During this time, you cannot yet repay the mortgage on your old home, while you already need to take out a mortgage for your new property. This means you temporarily borrow more, resulting in higher monthly payments.

A bridging mortgage in Curaçao is usually not included when calculating your maximum mortgage, allowing you to borrow more. In addition, this mortgage makes it possible to use the equity from your current home to (partly) finance your new home. Once your old property is sold, the bridging loan is repaid and you transition to a regular mortgage.

Interest rate on a bridging mortgage

With a bridging mortgage, you only pay mortgage interest, as it is an interest-only mortgage. The interest rate is usually slightly higher than the regular mortgage rate, because the bank takes on more risk. The rate is calculated as a surcharge on top of the standard mortgage interest rate. Once your old mortgage has been repaid, this surcharge expires and you pay the regular interest rate.
Tip: the interest paid on a bridging mortgage is tax deductible.

Costs of a bridging mortgage

You will incur additional costs, but not for two full mortgages. The equity in your existing home can be used for the new mortgage, meaning the bank advances this amount. In addition, there are costs related to arranging the new mortgage, such as advisory and mediation fees, appraisal costs, and notary fees. A mortgage advisor can help you gain clear insight into these costs.

Conditions of a bridging mortgage

• The maximum term is two years.

• You can repay without penalty.

• You only pay mortgage interest, no principal repayment.

• Mortgage interest tax deduction is possible.

Due to these conditions, the increase in your monthly payments remains limited.

Advantages of a bridging mortgage

• Covers double mortgage payments and additional costs.

• No interim repayments required.

• Favorable repayment conditions: repayment at any time and penalty-free.

Disadvantages of a bridging mortgage

• Higher monthly payments.

• Risk of a residual debt if the property is not sold within two years.

This article was written by Adriaan Smit, buying & selling real estate agent in Curaçao.

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