The Main Features of a Personal Bridging Loan
Recently updated on January 10th, 2023 at 05:07 pm
A bridging loan is a type of short-term finance that is an increasingly popular alternative to acquire funding quickly for personal or business use.
What’s involved in a bridging loan?
A bridging loan can be taken out on top of your current home loan and can be an ideal solution if you need to ‘bridge the gap’ between purchasing your new home and selling your existing one. The loan takes into account your current home’s loan balance, the new home’s contract purchase and miscellaneous costs, such as stamp duty, legal fees, and lender fees.
Quite often, the minimum repayments of a bridging loan Australia will be calculated on an interest-only basis. Once your current property is sold, the sales proceeds are used to repay the debt.
Reasons to get a bridging loan
Here are some reasons why many borrowers are considering a bridging loan as an alternative source of finance:
- Quick approval
- Less documentation
- Minimal or no income assessment
- Flexible term payment
- Up to 24 months
- Australia-wide
- May be National Consumer Protection Act-compliant by lenders
- Apply online
- Impaired or bad credit borrowers considered
- Variety of different usages (for personal or business purposes)
What are the benefits of a bridge loan?
Here are a few advantages of getting a bridging loan in Australia.
1. Quicker way to access cash
In many cases, bridging loans can be arranged much faster than other forms of finance. For example, a mortgage may take months to organise. In comparison, a bridging loan can often be processed in a matter of days.
2. Easier lending
In contrast to other loan types, a bridging loan is typically streamlined, simplified and requires minimal documentation to process.
3. No excessive fees
It’s important to consider a lender that is upfront about its fee structure. Be sure to consider all fees associated with the loan, including application fees and exit fees.
4. Limitless potential
Bridging loans can be used for a wide range of purposes for business or personal use.
5. Short-term, flexible repayments
One of the main benefits of a bridge loan is that the financing is short-term and lenders are renowned for having flexible terms (particularly in the specialist lender, private lender, non-bank and fintech space). In addition, many lenders allow you to choose repayment options.
What is a bridging loan secured against?
Typically, you can secure a bridging loan Australia with the following assets:
- Land
- Rental properties
- Residential properties
- Properties to build and renovate
- Commercial and semi-commercial properties
Bridging loans for commercial properties
Using commercial properties as bridge loan security is possible, depending on the lender. That said, lenders often place restrictions on certain commercial properties, including petrol stations and restaurants.
Key takeaway
If you have existing real estate, you may be able to take out a bridging loan to access additional funding for personal or business use.
At Mango Mortgages, our bridging loans can be used for a wide range of purposes – including an opportunity that’s too good to miss. You can apply online here.
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