Bridging home Loan

Many people find the idea of buying one home while selling another to be a complete nightmare. What happens if your old home doesn’t sell in time? What happens if you sell your own home too soon and you haven’t found a new one to buy yet?

With a bridging loan, your lender will loan you the money to cover the gap between settlement and purchase. Effectively, the lender agrees to take on both mortgages. Bridging finance typically covers a period from a few days to a few months.

To qualify for bridging finance, borrowers must show that they can pay their existing mortgage as well as interest costs on the new loan. Lenders may also charge exit fees from existing loans, establishment charges for the new loan, valuation fees, legal fees and penalties if you exit a fixed loan. Lenders generally apply strict criteria to bridging finance before giving approval. Conditions can include the unconditional sale of a borrower’s existing property and restrictions on proposed settlement terms. Other conditions may be imposed on a case-by-case basis.

Benefits:

·          Easier transaction between selling and buying properties

·          Saves money and time on moving to a rental property first while your home sells, instead one simple transaction and move.

·          Lenders usually allow up to 6 month to sell your home

Points to Consider:

·          You will be paying off two mortgages at the same time

·          Interest rate is adjusted according to lenders and your situation.

·          Might be force to sell existing home at a lower price then attended.