Bridging Loans

Bridging Loans For Your Home Transition

We all know how daunting it is to sell your home quickly to buy your next dream home from the market. Timing is crucial since you can’t do anything if you found your dream home on sale and still isn’t prepared to sell your current home.

That’s where a bridging loan comes into play. We can help lift the burden off your shoulders by taking you through various bridging loan options. The bank or lender will finance the property you’re looking to purchase while your existing house is still up for listing.

We’ll Help You Safely and Swiftly Buy & Sell Your Home

Here are some FAQs about bridging loans. Read on to know more about how we can help you secure one without the hassle and hidden fees.

What are Bridging Loans?

By definition, bridging loans are temporary loans that only have 6 to 12-month terms that let you buy your next home while the old one is still for sale.

The amount you can borrow under a bridging loan is usually:

• The balance needed to complete your next purchase. This includes stamp duty and other processing fees.
• Less than your loan deposit (typically 10%) plus other contributions you can provide
• Closed by paying off the sale proceeds of your old house. The remaining balance or end debt is then repaid for a given term.

When do I Need a Bridging Loan?

We at JFS Financial Strategists usually recommend a bridging loan if:

• You want to invest or upsize in a more expensive house than your old home.
• Your old property has enough equity, or you have available liquidity to pay for the bridging loan interest.
• Purchased (or planning to buy) your next home but still preparing the old property to sell.

How Can I Repay Bridging Loans?

Your bank or non-bank lender will provide the bridging loan and incur interest on this service. You can then pay the interest in either of the following ways:

• As a capitalised interest
• And as monthly interest-only payments throughout the bridging period

How Can I Qualify for a Bridging Loan?

To get approved for a bridging loan, you should:

• Have enough equity on the old property to secure the bridging loan, then just pay the capitalised interest after-sale
• Prove that you can afford the end debt once you close the bridging loan
• Demonstrate that you can repay the interest throughout the loan term from savings or other equity buffers

During the equity assessment, your bank or lender will discount your property’s value to compensate for real estate fees and reduce the risk in the bank once the property sells for lower than its declared price.

Your bank will require you to provide an independent valuation report on your home to see if it has enough equity to pay off the loan upon sale.

Which Lenders or Banks are Offering Bridging Loans?

Keep in mind that not all banks offer services such as bridging loans. Your options will also vary depending on your available equity, financial position, and your existing home’s property.

Our specialists at JFS Financial Strategists will sit down with you for a bespoke evaluation and recommendation so you can get a bridging loan that works for your needs.

Contact us today to discover your bridging loan options and transition into your next home without carrying the hassle along.