finances

When you first get the idea to buy a second home, there’s excitement, a desire to move quickly, and a true sense that you are diving headfirst into a new, exciting chapter of life. But you also start to realize that, for all the thrill, this may not be a move that you’re able to make.

There are a lot of financial factors that may not seem to align as you start shopping around for your second home property. But there’s no need to give up hope. You can still finance your second home as there is a wide range of home loan finance options for the next homebuyer like you, so read on to explore different financing possibilities. 

Who knows? You may find an option that suits your needs and make your dreams of having a fresh start a reality. 

Different Home Loan Finance Options for the Next Home Buyers (Part 1) 

1. Home Loan Porting 

It’s simple. With home loan porting, you can simply port or transfer your existing home loan to get a second home. The home loan porting may be a great home loan solution for you if you have a good asset and you are looking to port your existing loan to buy the next property.

With porting, you can get a loan for a new property. Not to mention, the same lender will continue to be your home loan provider for both properties. But, you need to make sure your existing home loan has enough equity as you may be required to pay some equity as well. 

In addition, you may also need to pay a one-time transfer fee and stamp duty when you port your existing home loan to get the next home.

What are the Pros and Cons of Home Loan Porting?

The Pros:
  • Save on break costs; 
  • Save on mortgage discharge and application fees; 
  • Fast-track the process compared to refinancing; 
The Cons:
  • You need to pay stamp duty;
  • It's not always the most competitive option, especially if you end up paying higher interests; 
  • If the properties have significantly different values, then the process can be too complex to follow; 

2. Bridging Home Loan

Bridge loans are popular among the next home buyers who have a good credit history and high equity in their existing home. With a term lasting up to 12 months, you can finance your next home purchase, all the while selling your existing home so the proceeds can be used to cover the amount you borrowed from a bridging loan. 

A bridging loan is a good option for those who are looking to purchase a second home without all the hassle in the application process. You can even get a new bridging loan against an existing home loan without any additional repayments or fees.

Bridging home loans may be a great consideration if you can’t afford a full home loan repayment. If you are only buying a property for short periods, it is recommended to get a bridging loan to allow you to buy the second home with a much smaller deposit and it also allows you to sell your current home more easily.

What are the Pros and Cons of Bridging Home Loans?

The Pros:
  • Bridging home loans is a faster way to finance compared to other traditional loans;
  • The repayment is more affordable as it is paid on a retained interest basis, so any additional costs are added to the total loan amount; 
  • It is one of the most diverse financing options, and can be arranged as a second or even third charge for 100 per cent, so long as the security is proven to be stable; 
The Cons: 
  • Naturally, it comes with higher interest rates;
  • You will need to consider plenty of additional fees such as the arrangement fee, broker fee, valuation fee, and legal fee; 
  • It is a risky financial option, especially if future payments for your current home fall flat, leaving you with a large debt. 

The Bottom Line: Explore Home Loan Finance Options for Your Next Home Purchase

Among the home loan finance options for the next home buyer like you, choosing the best one always comes back to the typical needs that you have for your next home purchase. So regardless of whether you are looking for a short-term, long-term, or even a permanent home, you should have the right type of home loan to ensure that your next dream home is just a step away.

Keep in mind that we’ve only touched on a few home loan financing options, so stay tuned for more in our next article! 

How Can We Help You?

If you're looking for the best mortgage broker in Sydney, you've come to the right place because Wealthy You is here to assist you in your home buying journey.  Our bridging loans for pensioners can help you move forward in your next home purchase!

Wealthy You is one of the leading mortgage companies in Sydney, offering various mortgage solutions that meet every client's needs. Since we're alternative lending specialists, we provide restructuring loans in Sydney that make refinancing your home simple. 

Learn more about our services today!

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