Bridging Finance

Buy Your Dream Home Now, Sell Later with Bridging Finance

Dreaming of your next home but not ready to sell your current property? Bridging finance in Australia could be the perfect solution. This short-term loan helps you 'bridge' the financial gap, allowing you to buy your new home before your existing one is sold.

What is Bridging Finance?

Bridging finance, or a bridging loan, is a short-term financial tool designed to help you purchase a new property without waiting for the proceeds from the sale of your current home. It uses the equity in your existing property to secure funds for your new purchase.

When Might You Need Bridging Finance?

Bridging loans are particularly useful in several situations:

Upsizing or Downsizing: Moving to a larger or smaller home without the pressure of selling first.
Relocating: Moving for work or lifestyle changes without needing temporary accommodation.
Auction Purchases: Securing a property at auction with immediate funds.
Building a New Home: Financing construction while living in your current property.

How Does Bridging Finance Work?

A bridging loan typically involves taking out a new loan secured against your existing property. This loan, combined with any existing mortgage, forms your 'peak debt'. Once your current property is sold, the proceeds are used to pay off the bridging loan, leaving you with your ongoing mortgage on the new property. Many bridging loans offer interest-only repayments during the bridging period to ease the financial load.

Benefits of Bridging Finance

Buy First, Sell Later: Secure your new home without the pressure of selling your current one immediately.
Avoid Temporary Accommodation: Move directly into your new home, saving time and money on renting or storage.
Negotiate a Better Price: Take your time to find the right buyer for your existing property.
Flexibility: Offers financial flexibility during a significant life transition.

Things to Consider

Interest Rates: Bridging loan interest rates can be higher than standard home loans.
Fees: Be aware of potential application, valuation, and legal fees.
Loan Term: Bridging loans are short-term, typically lasting 6 to 12 months.
Risk: If your existing property takes longer to sell, you may incur more interest.

Types of Bridging Loans

Open Bridging Loan: No fixed sale date for your existing property, offering more flexibility but potentially higher interest rates.
Closed Bridging Loan: Fixed repayment date, usually aligned with the expected sale of your current property, often with lower interest rates.

Am I Eligible for Bridging Finance?

Eligibility criteria can vary between lenders, but generally include:

Sufficient Equity: A significant amount of equity in your current property.
Serviceability: Demonstrating the ability to manage both your existing mortgage and the bridging loan repayments.
Acceptable Loan-to-Value Ratio (LVR): Usually a maximum LVR on the combined value of both properties.
Sale Contract (Sometimes): Some lenders may require a signed sale contract for your existing property.

Costs of Bridging Finance

The costs typically include:

Interest: Generally higher than standard home loan rates.
Application Fees: Can range from a few hundred dollars or a percentage of the loan amount.
Valuation Fees: Usually required for both your existing and new properties.
Legal Fees: For conveyancing and loan documentation.
Discharge Fees: Payable when the loan is completed.

Finding the Right Bridging Loan

Many lenders in Australia offer bridging finance, including major banks and specialist non-bank lenders . Mortgage brokers can also assist you in finding the right loan for your needs.

Ready to explore your bridging finance options? Contact us today to learn more and take the next step towards your dream home!

Book Your Free Consultation Now

Inquiry | Call 0413 798 731 | email: info@frontierfc.com.au

Frontier Finance Co. – Loan Specialists for Australians who want more for their future.

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