Bridging Home Loans Advice
Many people find the idea of buying one home while selling another to be a complete nightmare. What happens if your old home doesn’t sell in time? What happens if you sell your own home too soon and you haven’t found a new one to buy yet?
Bridging home loans can simplify the transition between buying and selling properties. A bridging loan can offer you the simplicity of moving into your new home while your old home is still waiting for a buyer to snap it up.
How Does a Bridging Home Loan Work?
Your bank will assess the level of equity available in your existing home and then may decide to forward the entire purchase amount plus fees on your new home. This allows you up to 6 months to try and sell your old home while you’ve already moved in and begun enjoying your new place without the hassles of missing settlement dates.
Some lenders may offer you the option of capitalising your interest payments into your equity, so this could mean you don’t even have to worry about making repayments on two mortgages.
Can I Use a Bridging Home Loan If I’m Building a House?
Yes! Bridging loans are an excellent option for anyone wanting to construct a new home.
So many people end up selling their old house first, moving into a temporary rental property and then having to move all over again when their new home is built. This is not only painful and expensive, but it’s unnecessary.
A bridging home loan means you get to stay in your own home while your builder completes your new dream home. Once your builder is done, you move in and you can simply put your old home on the market then.
What’s The Catch With Bridging Loans?
Of course while there are many advantages with bridging loans, there are some disadvantages too. In some cases, people may find it’s a little harder to sell their existing homes quickly, which means the interest charged on a large peak debt might get a little out of control.
While some people may decide to sell their existing home for a price lower than they originally intended, you do also have the option of placing short-term tenants into the property to help keep your interest costs covered while you’re trying to sell.
Other people may find they don’t quite have sufficient equity in their homes to qualify for a bridging loan.
The easiest way to learn more about bridging loans and if using a bridging loan is the right option for you is to contact a Choice Home Loans consultant. Our professional consultants are trained to find the right financial solution for your unique situation, so call and discuss your options today.