Bridging loans are temporary loans to enable you to purchase a new property without having to sell your existing property first. It gives you the ability to move on a property when you want to, without having to wait until your existing home is sold. If you are building a new home, Bridging Finance may allow you to remain in your existing home until completion.
Typically there are two types of bridging loans…
- A single loan taking both properties as security. Your bridging loan period is usually 6 – 12 months to allow you to sell your existing property. Within that time you would generally pay interest only until your existing property is sold, and the proceeds of the sale are put towards the overall debt the balance of which would then normally revert to a principle and interest loan.
- A separate loan for the new purchase. In this case you would not make any repayments during the bridging period. Interest would accrue on the new loan while you would still be making payments on your existing loan. Once your property is sold the existing home loan debt is paid out and the outstanding debt on your new property will need to be renegotiated.
With Bridging Loans consideration needs to be taken with regards to the risks, such as your property not selling within the bridging period, where you may be forced to sell at a reduced price resulting in a larger end debt to repay. Perth Finance Brokers can assist with your bridging loan finance by researching our wide range of banks and non-bank lenders to find the most suitable and affordable loan available.
Call now for more information or a free consultation.