Navigating the path to buying your next home can be complex and daunting. There are multiple ways to strategise the purchase, but it all depends on your position, which will ultimately decide how you can move forward to the home of your dreams.

Posted in: Insights

14/02/2020

Ideally you put your house on the market if it isn’t already, you get a great offer from a dream buyer in record time, your finances are brilliantly sorted by one or our amazing Mortgage Brokers, simultaneous settlement occurs and all of a sudden you are in your new dream home! 

Unfortunately it’s not always that simple, the list of to do’s can be overwhelming. You need to find a real estate agent, marketers, conveyancers, property dressers. You'll also potentially need the cash and time to get your current property ready for sale. Then there’s the open inspections and the ‘can we bring someone through tonight’ phone calls, insurances and the finance. We highly recommend you seek professional advice from a team of qualified people who know what they are doing. 

So how can the Team at Bernie Lewis Home Loans help you on your journey to buying your next home? 

Subject to Sale Offer

A Subject to Sale Offer is where you make an offer to purchase your new home subject to the sale of your current home. The subject to sale is a condition you would include in your offer to purchase your next home. You may also want to consider a longer subject to finance condition, and a lengthy settlement date in your offer to protect yourself further. 

Initially you will likely have to provide evidence of your property on the market, and your current mortgage balance for a conditional approval. To progress forward with a purchase you will need to provide evidence of the dischage and closure of your home loan.

Typically vendors can be less receptive to these types of offers due to the element of risk involved, and potentially longer time frames to settlement.

It is recommended to speak with your Mortgage Broker to determine the entire scenario and the costs invloved.

Bridging Finance
   
Bridging Finance will allow you to purchase your new home before you sell your existing home. This is a great option to ensure you don’t miss out on your new purchase.

Bridging Finance is a great opportunity if for instance your current home isn’t quite ready for sale, it can give you some extra time to get your home ready looking spectacular and on the market. Importantly you won’t be tempted or intimidated into settling for a smaller offer on your current property because you are anxious to get into your new home or have an Agent who is pushing for a sale. So essentially Bridging Finance gives you time.

Lenders policies vary, but most usually allow six months to sell your existing home. It is important to know that some lenders still need you to make interest payments on your existing home and your new home in addition to costs for the purchase. It is really important to make sure this is achievable.
 

Capitalisation

Some Lenders will also offer Bridging Finance where no re payments need to be made on the new loan for a set period of time. So you can continue to pay your existing mortgage as per usual, however the interest from the new loan will be capitalised (added onto) the new loan balance. For example some lenders might allow six months to sell your property in which time you do not have to make repayments on the new loan. The six months of interest payments will be calculated and added to the new loan balance. If your property does not sell in the term given by the banks you might be offered an extension of time, depending on lenders’ policy.

Is the unknown an exciting challenge or a concern for you? What will happen if you don’t sell? How will the LVR (Loan to Value Ratio) and existing equity influence your ability to be approved for Bridging Finance? Each lenders’ policies vary, our team of expert Mortgage Brokers can find a solution that suits your needs.

Call 8300 8300 to chat today!
 

*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone's personal situation is different, this article should not be taken as advice. We recommend you seek individual advice with a mortgage broker.