Understanding Bridging Loans.
What is a bridging loan?
What’s great about a bridging loan is that it gives you the flexibility to buy a new property before you’ve sold your existing property. So, it gives you more control and takes the stress out of having to align the sale of your existing property with the purchase of your new property.
How Does a Bridging Loan Work?
While you wait to sell that home, you find your dream home elsewhere. Instead of missing out on the opportunity to buy the new home because you haven’t sold your old one, you apply for a bridging loan.
The bridging loan allows you to combine your current home loan with the new home loan. So, if your get approved for a home loan of $820,000 then the bridging loan will add up to:
$230,000 + $820,000 = $1,050,000
While you wait to sell that home, you find your dream home elsewhere. Instead of missing out on the opportunity to buy the new home because you haven’t sold your old one, you apply for a bridging loan.
The bridging loan allows you to combine your current home loan with the new home loan. So, if your get approved for a home loan of $820,000 then the bridging loan will add up to:
Have a look at Sally’s example here:
How Can A Finance Hub And Networks Mortgage Broker Help You With Bridging Loans?
We Help At Every Stage
At Finance Hub and Networks, we can advise you on whether a bridging loan would be best suited to your circumstances.
We Compare The Market
We compare loans from various lenders to ensure you are getting the best deal.
We Do All The Paperwork
With banks clamping down on applicants with stricter lending rules, you’ll want your application to be perfect. We take care of all the paperwork!
Bridging Loan FAQs
How Long Is the Bridging Loan Period?
Bridging loans are structured differently from lender to lender, but you can expect it’ll have a limited loan term. Generally, however, lenders give you a 12-month bridging period to sell your home and settle the original home loan.
What Happens If I Don’t Sell My Property In Time?
There are usually special conditions attached to the time frame, like paying higher interest rates if the property is not sold within the bridging loan period.
Another thing to keep in mind is that interest is usually charged every month, so the longer it takes to sell your property, the more interest your new loan will tend to accrue.
What if I Sell My Original Property at a Loss?
Do Bridging Loans Have Any Special Requirements
There are a few requirements that may apply to bridging loans that wouldn’t apply to other types of home loans.
Depending on the lender and specific product you choose, you may have to pay a deposit of a certain amount to apply – usually around 20% of the combined loan total (so, your bridging loan and new loan).
Another condition may be that you won’t be allowed to use a redraw facility on the bridging loan during the bridging period.
Should I Have a Finance Hub and Networks mortgage broker Help With My Bridging Loan?
Bridging loans can be a great option if you’ve found your dream property but haven’t sold your current home.
As with any home loan, however, there are a few risks. So, it pays to speak to a professional Finance Hub and Networks mortgage broker so that you can get advice tailored to your circumstances.
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