Found your next dream property, but still selling your existing one? In a perfect world, the date on which we sell our existing property and buy a new one would seamlessly align. For those real-world moments when there’s a gap in your dates, and your bank balance, there’s bridging finance.
What is bridging finance?
As the name suggests, bridging finance helps you ‘bridge the gap’: you can purchase your new property while you wait for your existing property to be sold. Bridging finance could help to alleviate a little of that selling pressure.
Provided your loan is structured correctly, you’ve set realistic timeframes for your property sale and you’ve got solid estimates about what your property is worth, it could work for you.
When could bridging finance help me?
Here, we run you through 2 scenarios in which bridging finance may assist:
> Scenario 1 – you are looking to borrow funds from your current lender for a short period to buy your next property. You plan to repay the loan in full using the proceeds of sale from your existing property.
> Scenario 2 – you have an existing home loan with your current lender, and your lender agrees to increase your existing loan to enable you to purchase the new property.
What are the pros and cons?
Bridging loans are generally interest-only loans for set periods (such as 6 or 12 months) – so repayments can really start adding up – fast!
As loan features, structures and fees vary between lenders, it’s generally advisable to sell your existing property before you go hunting for your next one.
Bridging finance is not a ‘one-size-fits-all’ solution, by any means – so talk to us and explore your loan options today.