In between selling your home and getting the proceeds of the sale, you may need to pay some fees before the sale is finalised and closed. There may be several different payables you need to get over with before finally seeing the ball get rolling. Buying and selling costs may be out of your budget, especially if you had been counting on dipping into the sale proceeds to pay these fees.
The solution you may be looking for may come in the form of a bridging loan. This type of loan will “bridge” the gap between paying the fees and finally getting the earnings from your home sale. On many occasions, paying the fees will often come first—this is where bridging loans come in. However, there are a few considerations you need to make before taking out this type of loan.
Bridging Loans: Factors to Consider Before Getting One
If you need extra funds while waiting for the money from your home’s sale, bridging loans can be notoriously valuable to get you what you need. However, it is crucial that you consider how taking out a bridging loan will affect you in the future.
1 - Purpose of Taking Out the Loan
The first thing you need to think about is the primary purpose of you taking out a bridging loan. If you need the extra funds to tie you over until you get the proceeds of the sale, taking out a bridging loan will go a long way. Some people may also use a bridging loan to cover the costs of a deposit for buying a new home.
2 - Loan Term
Selecting a loan provider that can offer you reasonable loan terms is crucial. Since this is a short-term loan, you need to make sure that the loan terms are practical. It is essential to shop around until you find the right lender that will be able to offer you loan terms that will line up with your needs and budget. You must also see loan terms that will ensure that you will get the most out of the profits of your home sale.
3 - Interest Rate
Interest rates are vital when it comes to choosing a loan. Bridging loans are only meant to be short-term loans so that the interest rates may be higher than other loan types. Selecting a lender that will offer competitive interest rates is the key to maximising your loan.
4 - Other Fees and Charges
Look into the other fees and charges that may go into applying for this type of loan. Make sure that these fees are not excessive. This will ensure that you will be able to use the loan for your intended purpose and still benefit from the sale of your home.
If you are taking out a bridging loan to cover the fees that accompany your home’s sale and can find reasonable loan terms, this loan product will offer a quick and easy solution to your initial problem. The vital consideration is finding a reliable loan company to provide you with the bridging loan. Aside from using the loan to pay off the closing fees, you may also use the amount as a deposit for a new home. Working with the right loan company is crucial to ensuring that you make the most out of this financial product.
Need to apply for a bridging loan in Sydney? Come to Wealthy you! We are an Australian Mortgage Company servicing Sydney for almost a decade. Because of this, we can offer you a variety of mortgage solutions to meet your specific financial needs. As an alternative lending specialist, we make refinancing your home simple. Apply for a bridging loan with us today!