A bridging loan can help you buy a property whilst awaiting settling or selling off the property you currently own. This is a way of being able to buy a property without the other property selling or moving out of it first.
What is a bridging loan?
Bridging loans can sometimes be increasingly challenging to get for different reasons. They also are also more easily got in certain circumstances with a non bank lender. If you’re considering getting a bridging loan, it’s worth speaking to a mortgage broker who specialises in bridging loans.
The name ‘bridging loan’ helps to explain that this type of home loan takes you from your current step to the next step, or where you need to be next.
How does a bridging loan work
A bridging loan works typically by a lender lending money on a second property, whilst awaiting for the prior one to sell.
In this way, they would typically take security (or have as collateral) both properties. Once a property sells, this helps repay the part of the associated home loan debt.
How to apply for a bridging loan
- You can contact a mortgage broker or home loan adviser to discuss a bridging loan
- Explain the situation including what property or house you already own, and the one you wish to purchase
- Explain the circumstance, for example have you started marketing your current house for sale, or is that something you’d do later? Or have you already sold it and just awaiting settlement?
- Provide a timeframe, for example it might take 6 months for you to sell the other home
- You may also need to provide details like your finances and other affairs
- Follow other steps as required
The mortgage adviser can also work with you to understand if the type of home loan you need is an open bridging or a closed bridging loan (Open Bridge vs Closed Bridge loans can be different).
Best bank or lender for bridging loan
People wonder which is the best bank or lender for a bridging loan. This is something worth discussing with a qualified mortgage adviser. Not all banks and lenders are the same in their policies or procedures for bridging loans.
It’s also worth understanding your timeframe, current situation, whether the house has been sold yet, or is yet to be put on the property market. This can potentially help influence which lender or bank may be more appropriate for the situation.
How it may help:
- Can help if you are in mortgage arrears or late with your payments
- Can provide some additional cash in the short term
- Prevent you from the bank forcing you to sell your house
It may be that we can find a solution where you can rebuild your ability to make repayments. Or it means that we can sort a solution that means you are not rushed in to a mortgagee sale and you have time to deal with your finances.This could be very important to you if you want to keep the house, and not lose it or have it foreclosed on or taken away. Many people have strong connections to their homes and want to save them. With the help of stopping the mortgagee sale it can be possible.
Get help even if the bank has previously told you they can’t help you , with the help of specialists in this area.
It could also be possible to give you a break from massive mortgage repayments and penalties before they start to pile up on each other, which could be achieved through refinancing.