MIND THE GAP – HOW A BRIDGING LOAN CAN HELP
In this article, you will discover how a bridging loan can help ‘bridge the gap’ between selling one home and buying another.
Buying a new home is exciting, but the timing can present a problem when it comes to selling your current home. In a perfect world, you would sell your existing home first, then use the proceeds to fund the purchase of your new home.
But as we all know, life often isn’t ‘neat.’
For instance, you might find yourself in a position where you’re unable to sell your current home before purchasing your new home, or you come across your dream home before even considering selling your current place Equally, you may not want to rush the sale of your current property and potentially sacrifice a better sale price that may be obtained if you waited a little longer. Another consideration is that you would prefer to stay in your current place while you purchase your new home to save the hassle of renting or moving twice within a short period of time.
In all these instances, a bridging loan can be a great alternative.
What is a bridging loan?
As the name suggests, a bridging loan helps ‘bridge the gap’ between the purchase of your new home and the sale of your current home. A bridging loan can be an ideal solution when you need to act quickly to secure a new property and the settlement dates for purchasing and selling don’t match, which is often the case.
What are the benefits of a bridging loan?
A bridging loan lets you do things on your terms during what is an already stressful time. The main benefit of a bridging loan is that it enables you to have the breathing space to avoid the feeling that you need to urgently find, or potentially pay an inflated price for, an upcoming property. Equally, a bridging loan removes the pressure of feeling forced to sell your existing property for potentially a lower amount due to time restrictions. It also helps with the timing of your move from your current home to your new home without the need to pay storage costs, hotel accommodation or rent.
How does a bridging loan work?
Bridging loan lenders assess the equity in your current home, the price of your new home and then tailor a combined loan while you sell your current home. Bridging loan providers offer a range of options to suit your particular circumstances and timing requirements.
A bridging loan from a short-term lender can be advantageous. Short-term lenders are often ‘private lenders,’ which means they have far greater control over the loan amount and terms able to be offered. As such, private lenders are renowned for being very flexible with the borrowers they help, as well as types of loans they write. Also, because short-term loans typically only require minimal paperwork, they’re usually quick to process – which means that funding is often available within as little as a few days, and in many cases, you can easily apply online.
Bridging loans in Australia are well-established and can be a great choice if you need to act fast to secure your new dream home and haven’t yet sold your current residence.