We understand that buying and selling homes at the same time can be stressful. Coordinating settlement dates is tricky, and often buyers feel pressured to sell quickly — sometimes at the cost of achieving the best sale price. A bridging loans solves this problem, providing short-term financial support during the transition from one home to another.
What is a Bridging Loan?
A bridging loan is a short-term loan that “bridges” the gap between the purchase of a new property and the sale of an existing one. It provides the funds you need to secure your next home without waiting for your current property to sell.
Once the sale of your old property is complete, the loan is then converted into a standard principal and interest (P&I) home loan.
Why Choose a Bridging Loan?
Buying your new home before selling the old one offers several advantages:
- Act quickly in a competitive market: Secure your next home without being dependent on the timing of your existing property’s sale.
- Avoid renting: Eliminate the hassle and cost of temporary accommodation between selling and buying.
- Maximise your sale price: Take the time to prepare and sell your current home properly, without the pressure of a rushed sale.
- Renovate before moving in: Use the time to make renovations or improvements to your new property before you move.
Without bridging finance, many homebuyers would find it financially challenging to manage two mortgages at the same time. This new product removes that hurdle.
Key Features of Gold Finance Group’s Bridging Loan
Here’s what makes our bridging loan a smart option:
- Maximum Loan-to-Value Ratio (LVR): 80% of the property value
- Loan Purpose: Available for owner-occupiers
- Maximum Loan Amount: Up to $3 million
- Interest Rate Type: Fixed rate during the bridging period, for either 6 or 12 months (you choose the term)
- Repayments:
- During the bridging period: Interest-only
- Post-bridging: Converts to a standard principal & interest (P&I) variable-rate loan with an offset facility
- No repayments required: For the first six months of the bridging period, easing financial pressure
- Fees:
- Security assessment fee of $230 (or at cost)
- A bridging fee of 2% of the total loan amount (based on peak debt)
- Features during the bridging period: No redraw, offset, or Visa debit card access while the loan is in the bridging phase
This structure ensures flexibility during the bridging period and provides a smooth transition into a regular home loan once your property is sold.
How Does It Work?
When you apply for a bridging loan:
- Calculate peak debt: This is the total amount you owe, combining your new home loan and your existing home loan.
- Loan setup: You enter a fixed-rate, interest-only bridging loan for either 6 or 12 months.
- Sell your existing property: Once sold, the sale proceeds go towards reducing the total loan balance.
- Transition to regular loan: The remaining balance becomes a standard P&I home loan, and you continue with regular repayments.
Example:
Suppose you’re buying a new home for $800,000 and you still owe $300,000 on your current property, which you expect to sell for $600,000. Your peak debt would be $1.1 million (the sum of both loans). Once you sell the old property, the $600,000 proceeds would reduce the loan balance, and your repayments would then be based on the remaining $500,000.
Who Can Benefit from a Bridging Loans?
A bridging loan could be ideal if you:
- Found your dream home but haven’t sold your current home yet
- Want to avoid the cost and inconvenience of renting
- Prefer to take the time to market your home properly for a better price
- Plan to make improvements to the new home before moving in
However, it’s important to note that bridging loans are designed for short-term use. You should be confident in your ability to sell your existing property within the bridging period.
Things to Keep in Mind
- Valuations: Both your existing and new properties will need to be professionally valued.
- Sale Strategy: Have a strong plan in place for selling your current property, ideally within six months.
- Financial Planning: Remember that after the bridging period, repayments will include principal and interest, so plan for higher monthly repayments once the transition occurs.
Our expert mortgage brokers can guide you through every step, ensuring the bridging loan suits your circumstances and goals.
Make Your Next Move with Confidence
At Gold Finance Group, our goal is to remove the barriers between you and your dream home. Whether you’re upsizing, downsizing, or simply ready for a change, our bridging loan gives you the freedom and financial flexibility to move forward on your terms.
Schedule A Meeting Today to learn more about how a bridging loan can help you buy before you sell — and make your next move with confidence!