Loan Types
Bridging Finance
Bridging Finance is a specialised type of short-term loan designed to bridge the gap between the purchase of a new property and the sale of an existing property. It allows borrowers to access funds for the purchase of a new property before the sale of their current property is finalized, providing temporary financing to facilitate a smooth transition between properties. This type of finance is particularly useful for homeowners who are upgrading to a new property or downsizing and need to secure funds for the purchase of their new home while waiting for their existing property to sell. With Bridging Finance, borrowers can access the equity in their current property to fund the deposit and purchase costs of their new property, eliminating the need for a substantial upfront deposit. This flexibility allows borrowers to take advantage of opportunities in the property market without having to wait for their existing property to sell. It offers borrowers peace of mind and financial stability during the transition period, ensuring that they can secure their new home while minimizing the risk of delays or complications associated with the sale of their current property.
Features:
Short-Term Solution: It is designed as a short-term loan, typically ranging from six to 12 months, allowing borrowers to bridge the gap between property transactions without committing to a long-term mortgage.
Interest-Only Repayments: During the bridging period, borrowers typically make interest-only repayments on the loan, minimizing the financial burden and allowing them to focus on securing the sale of their existing property.
Pros:
Flexibility: Provides borrowers with flexibility and convenience, allowing them to purchase a new property before selling their existing property, enabling seamless transitions between properties.
Access to Equity: Allows borrowers to access the equity in their current property to fund the purchase of their new home, eliminating the need for a substantial upfront deposit and maximizing purchasing power.
Cons:
Higher Costs: Typically comes with higher interest rates and fees compared to traditional home loans, reflecting the short-term nature of the loan and the associated risks for lenders.
Potential Risks: There are potential risks associated with this type of finance, including the possibility of delays or complications in selling the existing property, which could result in higher interest costs or difficulties in repaying the loan. It’s essential for borrowers to carefully assess their financial situation and seek professional advice before considering Bridging Finance as an option.
Need Help Getting Started?
Not sure where to start? Don't worry the team are here to guide you every step of the way. Reach out today for a no obligation chat.
Speak To The Team Today
We’re Here to Make It Easy to Choose the Home Loan That’s Right for You!
Fixed Rate Loan
-
This is where the interest rate of a loan is guaranteed to remain the same.
Construction Loan
-
May be most suitable if you are building your own home or investment property.
Line Of Credit
-
Access to the equity in your home or investment property up to a pre-approved limit.
Split Loan
-
Make part of your home loan a variable rate and part a fixed rate, you decide how much you allocate to each.
Guarantor Loans
-
A family member uses the equity in their property as additional security against your loan.
Bridging Finance
-
Bridging finance allows you to use the equity in your existing home to finance your new one.
FAQ
Bridging Finance is a short-term loan designed to bridge the gap between the purchase of a new property and the sale of an existing property. It allows borrowers to access funds for the purchase of a new property before the sale of their current property is finalized. The loan is typically secured against the equity in the existing property and is repaid once the sale proceeds are received.
Bridging Finance is beneficial for homeowners who are upgrading to a new property or downsizing and need temporary financing to facilitate the transition between properties. It's also useful for property investors who wish to purchase a new property while waiting for the sale of their existing investment property.
Bridging Finance is designed as a short-term loan, usually ranging from six to 12 months. The duration of the loan depends on factors such as the sale timeline of the existing property and the terms negotiated with the lender.
The costs associated with Bridging Finance include interest charges, establishment fees, valuation fees, and legal fees. Interest rates for Bridging Finance are typically higher than those for traditional home loans due to the short-term nature of the loan and the associated risks for lenders.
If you are unable to sell your existing property within the Bridging Finance period, you may face challenges in repaying the loan. In such cases, you may need to explore alternative options, such as extending the Bridging Finance period, refinancing the loan, or seeking other forms of financing. It's essential to discuss your options with your lender and seek professional advice to find the best solution for your situation.