Bridging Finance is the answer when you want to purchase your new home before you have sold your existing home. It is a viable solution if you aren’t yet in a position to sell your current home, prior to buying your next.

Posted in: Insights

18/03/2019

How does it work?

Bridging loans can be secured through the equity you have in your existing home, the new home you want to purchase, or both. It is important to check the level of equity you have, to see if it is an option for you.

Typically this will give you 6 to 12 months to sell your old home. 

During the bridging period you usually make interest only payments on your existing home and your new home, in addition to costs for the new purchase. Once you have sold your existing property, your payments will switch to principle and interest on the remaining debt left.

Be aware that there can be repercussions of not selling within the set bridging period.

Capitalisation

Alternatively, Bridging Finance can be provided through a new loan where no repayments are required for a set period of time.

Although the new loan doesn’t require repayments during the bridging period, interest will be calculated and added on top of the loan.

Whilst this interest is capitalising, you will continue making the existing principle & interest payments on your current loan for your to be sold property.

When your current home has sold, and that loan has been paid off and closed, your broker can then renegotiate your new home’s loan terms on your behalf.

 

There is plenty to consider when thinking of Bridging Finance. Such as, what will happen if you don’t sell? How will the LVR (Loan value ratio) and existing equity influence your ability to be approved for Bridging Finance? Each of our Lenders’ policies are different, but our team of expert Mortgage Brokers can guide you in the right direction.

A Bernie Lewis Mortgage Adviser can look at your individual situation and help you establish whether bridging finance is suitable for you. Call us today on (08) 8300 8300 to discuss your options.

This information is general in nature and does not take into account your personal circumstances.