When buying a new home or investment property, it can be really difficult for the average homeowner or property investor
to be able to finance a new property while still in possession of their
old one. To address this common conundrum, lenders now provide a
bridging loan, which can be used to manage the transition between buying
and selling properties. If you can’t afford to buy a new property until
the old one is sold, then read on for some tips to help you decide
whether or not a bridging loan is right for you.
How a Bridging Loan Works
A bridging loan ‘bridges the gap’ between two home loans. Your lender will take security over both properties and lend against them until the your have officially bought the new property and sold the old one. Depending on your lender, you will have up to 6 months to sell your old property if you’re buying a new established one, and up to 12 months if you’re building a new house. When you sell your old property, the proceeds will pay off the bridging loan, and any remainder on the loan will become your new home loan. Your new home loan will take on the interest rate you and your lender agreed on.
Types of Bridging Loans
Generally, there are two types of bridging loans that you have to choose from, and which one you get will depend a lot on how much equity you have in your existing property. The lender might:
As with every type of loan, there are some things you should consider before jumping right in. After doing some careful research and assessing their finances, many people find that they are better off waiting to sell their existing property before committing to a new one. While a bridging loan is still a fantastic alternative in some situations, you should consider some key issues:
Elite Wealth Creators have been involved in the property and finance industry for over 20 years. Our Investment Property Strategists deliver investment grade properties to the investment market and mediate between the developer and the investor. We also assist first home buyers in purchasing their first home in QLD through our house and land packages – this includes receiving $20,000 cash back towards their mortgage by buying one of our full turn-key packages.
Our service will take you through the complete process of buying positive cash flow property, including:
• educating you on positive cash flow and the ability to pay your mortgage off years in advance
• saving you thousands of dollars in interest
• supporting you in the decision on which property to buy
• assisting in the organizing of your finances, if required
• preparing you for settlement of contracts
• liaising with other professional advisers on your behalf if required.
Our Strategists specialise in delivering quality positive cash flow property and also helping investors pay off their mortgage years in advance
http://www.
sales@elitewealthcreators.com
1800 GO ELITE
A bridging loan ‘bridges the gap’ between two home loans. Your lender will take security over both properties and lend against them until the your have officially bought the new property and sold the old one. Depending on your lender, you will have up to 6 months to sell your old property if you’re buying a new established one, and up to 12 months if you’re building a new house. When you sell your old property, the proceeds will pay off the bridging loan, and any remainder on the loan will become your new home loan. Your new home loan will take on the interest rate you and your lender agreed on.
Types of Bridging Loans
Generally, there are two types of bridging loans that you have to choose from, and which one you get will depend a lot on how much equity you have in your existing property. The lender might:
- Offer you a single loan that will cover the mortgage debt you currently have as well as the new purchase. In this case, the lender will take on both properties as security while you try to sell your old property. Then, the proceeds are put toward your overall debt, with any remaining debt serving as your new home loan; or
- Offer you a second loan for the new property while you retain your existing mortgage, requiring you to make repayments on each one during the bridging period. Upon selling your old property, the proceeds would first pay the lender for the original mortgage, with any leftovers going towards reducing the debt on your new loan.
As with every type of loan, there are some things you should consider before jumping right in. After doing some careful research and assessing their finances, many people find that they are better off waiting to sell their existing property before committing to a new one. While a bridging loan is still a fantastic alternative in some situations, you should consider some key issues:
- If your old property isn’t sold by the end of the bridging period, then you will have to start making repayments on the peak debt or continue to pay two mortgages.
- You may have to sell your existing property for less than you expected, which would leave you with a larger debt than you envisioned.
- Bridging loans in Australia typically have higher interest rates than other loans.
Elite Wealth Creators have been involved in the property and finance industry for over 20 years. Our Investment Property Strategists deliver investment grade properties to the investment market and mediate between the developer and the investor. We also assist first home buyers in purchasing their first home in QLD through our house and land packages – this includes receiving $20,000 cash back towards their mortgage by buying one of our full turn-key packages.
Our service will take you through the complete process of buying positive cash flow property, including:
• educating you on positive cash flow and the ability to pay your mortgage off years in advance
• saving you thousands of dollars in interest
• supporting you in the decision on which property to buy
• assisting in the organizing of your finances, if required
• preparing you for settlement of contracts
• liaising with other professional advisers on your behalf if required.
Our Strategists specialise in delivering quality positive cash flow property and also helping investors pay off their mortgage years in advance
http://www.
sales@elitewealthcreators.com
1800 GO ELITE
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