people shaking hands

Trying to sell your present house while looking to buy a new one can make finances feel challenging and confused. Do you plan to move into one home first, then sell it in the hopes of buying another?  

Do you attempt to sell your previous home while simultaneously trying to buy your new one and paying two mortgages? (expensive!) You also can obtain a bridging loan in Sydney or financing to handle the purchase and selling of your property.

What Are Bridging Loans?

Bridging finance, commonly referred to as a bridging loan, is a brief loan that a lender will grant you to fund the purchase of your new house while you sell your current property. You can also use bridging loans if you wish to continue living in your current residence without first selling it while you build a new one.

What's the Process for Australian Bridging Loans?

You can apply for a bridging loan if you require financial support to pay your current mortgage and the mortgage on your new house. When considering bridging finance, a qualified mortgage broker is a fantastic alternative. 

To finance without difficulty at this time, finding the ideal lender and bridging loan solution is essential. Mortgage brokers can search through various lenders and home loan options to locate one that is right for you.

Your chosen lender will normally take over the mortgage on your current residence and finance the purchase of your new house, including the associated expenditures like lender fees and stamp duty. 

Peak Debt is the sum you will borrow through a bridging home loan. Generally, you will only need to make interest-only payments, but several financing choices are available depending on the institution you choose.

Your Peak Loan will be deposited using the money from selling your current home, leaving you with the End Debt or the remaining sum of your debt. The remaining debt on a bridging mortgage becomes the new conventional mortgage for your new home.

Advantages of Bridging Financing

The main advantage of bridging finance is that it can enable you to borrow up to 100% of the purchase price of the new property as well as any related charges when you're purchasing and selling homes close together. 

Rather than stressing how you will pay off two mortgages at once if you cannot do so now but will be able to do so once your current home sells, a bridging loan will lessen your financial burden. It also allows you to concentrate on finding your next dream home and selling your first home at the right time.

  • Bridging loans also save you money on rent while you wait to buy your next house after selling your first one. 
  • Possibility to submit an offer on your dream property even if you aren't yet prepared to list your existing residence.
  • Make use of a loan's interest capitalisation provision, which lets you postpone paying interest until the bridging home loan is completed (when you sell your first house and deposit the loan's Peak Debt portion).

For more information, you can also consult reliable mortgage companies in Sydney.

Do You Qualify for a Bridging Loan?

The following are our top suggestions for determining whether bridging financing is appropriate for you:

  • Request a property valuation on your current house from your Sydney mortgage broker so you can determine how much you can get for it on the open market and how much equity you have.
  • Do you own at least 50% of the equity in your existing residence? This will increase the appeal of your bridging finance application to a lender. Even though you can use interest capitalisation during this time, making some payments during the bridging period is a good idea to reduce the interest you will have to pay when your house is sold. What would you do if your house didn't sell right away? 

Conclusion 

Considering all of your living and financial alternatives while purchasing and selling properties is a smart idea, even though it's highly unlikely given how hot the real estate market is. You may need to work with a versatile mortgage broker for this. 

Due to our over ten years of experience as an Australian mortgage company serving Sydney, we at Wealthy You can provide various mortgage alternatives to satisfy your financial requirements. We make refinancing your home simple as an alternative lending expert. Contact us for more info on a bridging loan in Sydney!

by:

Leave a Reply