Preferred Business Partners
Helpful Links
No content available
- HOME
- BUYING YOUR
FIRST HOME? - UPSIZING OR DOWNSIZING
YOUR HOME? - INVESTING IN
PROPERTY? - BUILDING OR RENOVATING
YOUR HOME? - REFINANCING OR
CONSOLIDATING DEBT?
FAQ Upsizing or Downsizing your Home
- I've found a new property but haven't sold my existing home yet?
- What is bridging finance?
- How are repayments calculated on a bridging loan?
- Do I need to make repayments on a bridging loan?
- How do I arrange a deposit on the new property?
- What is a deposit Bond?
I've found a new property but haven't sold my existing home yet?
Bridging finance is an option in this situation, but you need to thoroughly do your homework before committing. For most people it is far more advisable to sell your existing property before you commit to a new one.
What is bridging finance?
Short-term finance that is used to 'bridge' the financial gap before securing long-term finance, or selling a property. Higher interest rates may be charged for bridging finance.
How are repayments calculated on a bridging loan?
Minimum repayments are normally calculated on an interest only basis. Depending on your lender you may be able to capitalise all repayments until the sale is completed, which means they are added to the total amount of your loan. But remember this option will cause your peak debt to increase.
Do I need to make repayments on a bridging loan?
Your lender may allow you choose either to capitalise your repayments or continue to pay them. If you continue to make repayments, this will stop the total amount of the loan ballooning and limit the amount of additional interest being charged.
How do I arrange a deposit on the new property?
If you do not have funds readily available you could arrange a Home Equity Loan or Line of Credit if you have sufficient equity available in your current home, which will probably take a month arrange. Alternately you can arrange a deposit bond.
What is a deposit Bond?
A deposit bond can be used as an interim substitute for a cash deposit. They are generally issued by an insurance company or financial institution. If the vendor accepts this bond, the purchaser would be required to pay 100% of the purchase price at settlement.
You can apply for a deposit bond once you have the formal approval from the lender, or if you can show that you have access to funds from another source such as equity in your home.
E-Mail this article to a friend