How to Use A Bridging Loan in Australia to Secure Your Dream Home

Recently updated on June 5th, 2023 at 05:50 pm

A bridging loan in Australia is designed to help homebuyers bridge the financial gap between buying a new property and selling their existing one.

Let’s take a closer look at how bridging loans work and how you can use them to secure your dream home in Australia.

What Is a Bridging Loan in Australia?

A bridging loan is a type of short-term loan that can assist homeowners in the process of buying a new property while still owning and paying off their existing property. Bridging loans are typically used to cover the gap between the sale of an existing property and the purchase of a new one.

This type of loan can be particularly useful for those looking to buy a new property but cannot do so until they have sold their current home. By taking out a bridging loan in Australia , they can purchase their new property before they have sold their existing one.

How Does Bridging Finance Work in Australia?

Bridging loans provide the borrower with the funds they need to purchase their new property while they wait for their existing property to sell. The loan is typically secured against the borrower’s existing property and the new property they are purchasing.

Borrowers can choose to make interest-only repayments on the loan during the bridging period, which can be up to 12 months. Once the existing property is sold, the funds are used to pay off the bridging loan.

What Are the Benefits of Using a Bridging Loan in Australia?

There are several benefits to using a a short-term bridging loan in the Australian financial market, including:

Allows for a quick and flexible financing option for purchasing a new property while still paying off the existing one.
Provides an opportunity to secure a new property before the sale of the existing property is finalised.
Can potentially offer more favourable terms than traditional loans, as they are typically secured against the property being purchased.
Offers a range of repayment options, including interest-only payments during the term of the loan.
Can be used for both residential and commercial property purchases.
Can potentially help borrowers avoid costly penalties and fees associated with delayed property settlements.
Enables property investors to take advantage of opportunities in a competitive market by securing finance quickly.
Offers a simpler and more streamlined application process than traditional loans.

How Can You Use a Bridging Loan in Australia to Buy Property?

If you’re considering using a bridging loan to purchase your dream home in Australia, here are several steps you can take to ensure that the process goes smoothly.

Step 1: Speak to a Mortgage Broker or Lender

The first step in using a bridging loan to secure your dream home is speaking to a mortgage broker or lender specialising in

bridging loans

. They can help you determine whether a bridging loan is the right option for you and offer you professional advice on how to structure your loan.

Step 2: Determine Your Borrowing Capacity

Before you start looking for your dream home, it’s important to determine your borrowing capacity. This will help you determine how much you can afford to borrow and what type of property you can afford to buy.

Step 3: Find Your Dream Home

Once you know your borrowing capacity, you can start looking for your dream home. It’s important to remember that the property you choose will need to be suitable for a bridging loan in Australia.

Step 4: Apply for a Bridge Loan

The next step is to apply for a bridging loan. Your lender will assess your application and determine whether you are eligible for a bridging loan. Ensure that you choose only the

best bridging loans in Australia.

At Mango Mortgages, we offer a range of bridging loan options to suit your individual needs. We understand that time is of the essence when it comes to purchasing a new property, and our bridging loans offer a quick and flexible financing option to help you secure your dream home. You can benefit from competitive interest rates, flexible repayment options and a streamlined application process. Apply online here.

Step 5: Sell Your Existing Property

Once your loan has been approved, you can start marketing your existing property for sale. It’s important to remember that you will need to sell your property within the bridging period, typically up to 12 months.

Step 6: Move into Your New Home

After your existing property is sold, the funds will be used to pay off your bridging loan, and you can move into your new home. Remember that you will need to have a plan in place for the sale of your existing property, as this will be used to repay your bridge loan.

Key Takeaway

A bridging loan in Australia can be a useful financing option for homebuyers looking to secure their dream home and enjoy the benefits of homeownership. Before applying for one, remember to speak to a mortgage broker or lender specialising in the best bridging loans in Australia to get professional advice on structuring your loan and choosing the right lender for your needs.

At Mango Mortgages, our expert team can guide you through the application process and help you secure the financing you need for a smooth property transaction. We are dedicated to providing personalised and professional service, and we work closely with our clients to ensure their financing needs are met. Whether you’re a first-time homebuyer or an experienced property investor, we can help you find the right bridging loan solution for your needs. Contact us today.

Mango Credit

Yanis Derums is the Founder and Director of Mango Credit– a leading private lender specialising in bridging loans for personal use and business short term loans for commercial and/ or investment purposes. Yanis has extensive experience with financial analysis, credit assessment, product structuring, and general business management