FOUND YOUR DREAM HOME BEFORE SELLING YOUR CURRENT PLACE?
How to overcome funding glitches with a short-term bridging loan
In this article, you will discover how a bridging loan can be a fast and easy way to ‘bridge the gap’ between the purchase of a new home and sale of your current home.
A short-term bridging loan can help you to manage the potentially tricky scenario of purchasing a new home whilst simultaneously trying to sell your current home. If you don’t get the timing just right, you might be faced with the prospect of missing the settlement deadline on your new home, or feeling pressured to sell your current home for a lower-than-expected price due to time sensitivities.
What is a short-term bridging loan?
In simple terms, a short-term bridging loan helps ‘bridge the gap’ between the purchase of your new home and the sale of your current home. The good news is there’s a variety of short-term bridging loan providers in Australia, and you can easily apply for bridging loans online.
How does a short-term bridging loan work?
A bridging loan is a short-term loan that can be taken out on top of your current home loan until the property is sold. Typically, short-term bridging loans are for up to 12 months and range from $25,000 – $500,000, pending on the lender and your personal circumstances. You can apply for bridging loans online from a variety of lenders, with private lenders offering a relatively simple application process, minimal documentation and fast funding (usually within three to five days from application).
When a short-term bridging loan can help
Consider the situation where you find your new home, but have not yet even put your current home on the market. In this common scenario, a short-term bridging loan means you can complete the purchase, and then sell your current home in a more relaxed manner – ensuring you don’t have to settle for a ‘fire sale’ price.
What are the benefits of a short-term bridging loan?
Short-term bridging loans have some key benefits, to include:
- Being able to purchase a new home when you find it – not after you sell your current place.
- Avoiding a rushed sale, and potentially a lower sale price, of your current home due to time pressures.
- Avoiding the rental and storage costs often incurred after the sale of your current home, whilst you find your new property.
- Removing a lot of stress associated with buying and selling at the same time.
It’s also good to keep in mind that a short-term bridging loan can provide a cashflow injection for personal use when:
- You want to renovate or prepare your property prior to sale
- You’d like to complete a small land subdivision or duplex intended for sale
- You need a deposit for a new property (investment or principal place of residence)
- You require help with moving, living, legal or medical costs
- You’re seeking to pay a personal bill or debt that can’t wait until the property is sold
- You’re downsizing
A short-term bridging loan is a very fast and easy way to access cash via equity in your home through the sale period. It avoids the pressure of not being able to purchase your dream home when you find it, or conversely a rushed sale of your existing property.