Buying property can be a tricky task on its own. But what should happen if you decide to sell your current home and buy another one? No matter how organised you may be, sometimes circumstances can prevent you from selling one property before you buy another and even if you sell your property, the settlement on both homes may be not correspond.
In this instance, a bridging loan may be the ideal type of finance needed. Bridging loans are designed to make the transition between buying and selling properties a less stressful and tedious job. So while you move into your new home and wait for someone to snap up your old home, you can rest assured that everything is under control.
A bridging loan works by the lender giving you the money you need in order to cover the gap between the settlement and the purchase. Essentially, the lender takes on both properties mortgages for a few days to a few months.
Bridging home loans are ideal even if you are building a new home. A bridging loan means that you can stay in your own home while your new dream home is being constructed. Once your home is built, all you simply do is move in and put your other home up for sale.
Some lenders allow the interest on the bridging loan to be capitalised meaning you have the relief of not making any loan repayments during the bridging period. This, however, may result in you having a slightly higher home loan to cover the capitalised interest. When your property is sold, the proceeds from the sale are put onto the bridging loan with the remaining amount being your new home loan amount. This is when the loan will usually revert over to your lenders standard variable rate or the interest rate you discussed with one of our lending managers.
To qualify for a bridging loan, you will need to prove that you are able to meet your current mortgage repayments as well as the interest costs on the new loan. Bearing in mind, some lenders may also apply exit fees from existing loans, establishment fees may be applicable for the new loan, valuation fees, legal fees and break costs from a fixed rate may need to be considered as well.
The best way to find out more about bridging loans is to contact us and one of our professional lending managers will help you make the right financial choice for your unique situation.
Call us today on 1300 500 300 or simply fill in the form below and let us assist you in making your dream home a reality with the right Bridging Loan!