We are looking to buy a new home and would prefer to buy before we put our own home on the market. Is that possible, can you still obtain bridging loans and what are the issues we need to be considering before we start looking?

Hi Frances,

Bridging finance or also known as 'go-between' finance can be a very good solution to allow you the freedom of finding your new home first then selling your current home after you finalise your purchase. It also gives you more time to get the right price for your sale without feeling rushed.

The serviceability is calculated on the end debt position NOT the total peak debt position. You need to consider the capitalised interest during the bridging period which is usually 6mths or less plus the stamp duty and other associated costs of buying and selling.

Feel free to contact me if you'd like me to come out and do some numbers for you. I'm just at Alexandria.


John J Maxwell
0434 544 225
john@cocalexconsulting.com.au
Cocalex Mortgage & Finance Consulting

Frances. Good morning. Thank you for your question. Yes. Bridging loans are certainly still available. One of the first things in considering which lender will to approach will be the answer to the question of what loans ( if any) are expected to remain after the sale of your existing home ?
Bridging loans, given there short term nature can have some additional costs in higher application fees. Other things that come to mind in choosing the most suitable option for you is,
A) who is your current lender ? This could be the cheapest option
B) understanding how lenders assess your repayment capacity at two critical points, ie when you have two loans running at the same time and then again for whatever loan remains at the end.
C) bridging loans are normally for a maximum period of six months and many lenders will require an undertaking from you that you are prepared to "meet the market" if your home is not sold in this period.
These are just a few of the key points.
I would be happy to hear from you and make a more detailed assessment for your personal situation.
Please feel free to call me on
1300 ASK KEN (275 536)
Regards
Ken Olds

Hi Frances,

Great questions. Yes, you can definitely buy before you sell with a "relocation" or "go-between" type of loan arrangement.
First we'd check if your existing lender is offering this facility. If that is the case it would definitely make things easier. In the event that we need to go with another lender, this lender will refinance the loan on your outgoing property at the time of the purchase of the new one. You will not have to pay any interest on the existing loan until the property is sold, the interest is rather capitalised for the briding period. Most lenders give you 6 months to sell your house, we have lenders who will extend this period if necessary.

As mentioned before, you will only need to service the end debt, the loan amount which you will end up with after property is sold.

Happy to run some numbers for you or answer any further questions you may have anytime.

Regards,

Umit Talarico
Premier Lending
0425 354 821
2/90 Queens Rd, Five Dock NSW 2046

hi Frances

The guys have made great points on the availability of bridging finance above.
2 considerations to add.
Firstly the loans are split in 2 being the bridge component or part which is to be repaid post sale of your home.
The other part the is your retained loan.
When doing the numbers to calculate these two loans the banks assign some risk buffer in incase you are unable to sell your home at the current estimated price. Typically a 10% buffer.
So this will mean you need good equity available in your current home to do a bridge loan. A lender may go above 80% loan to value of the properties but this is expensive as the bank will request lenders mortgage insurance.
Secondly, affordability needs to be demonstrated on the higher risk buffered post sale loan.
My thoughts are if you have a good deal team together to look at finance, agent for sale, solicitor, many of my clients can buy with a long dated settlement and secure a sale of their home under a normal contract to avoid bridging finance.

Happy to introduce my team.

Chris
0402567384
www.announcer.com.au