In Australia’s fast property market, buyers often need help financing a new property while waiting to sell their current one. Whether you’re downsizing, upsizing, or seizing a unique opportunity, it can be challenging to time the sale of your current home by purchasing your next one. A bridging loan can help by giving you immediate access to funds. It lets you confidently move forward without waiting to sell your old property.
A bridging loan provides a short-term financing solution tailored to bridge the gap between purchasing a new property and selling your current one. This option grants property buyers the flexibility and agility to act swiftly in a competitive market, eliminating concerns about the duration required to sell their existing home.
This type of loan ensures that you don’t miss out on purchasing a property because you haven’t yet sold your existing one.
Bridging loans suit several types of buyers, particularly those who need to move quickly. Buyers often encounter situations where they need funds before their current property sale is finalised. Here are three common reasons why people in Australia turn to bridging loans:
Downsizing
When children move out, or retirees seek a more manageable living space, many people opt to downsize to a smaller home. However, selling their current, larger home can take time. In such situations, a bridging loan can provide the flexibility to secure a new, smaller property without the pressure of selling their current home quickly.
Upsizing
As families grow, their housing needs often change and acting fast is essential when you are ready to find a larger home. A bridging loan can help you secure the perfect new property while giving you the time to sell your current home on your terms. With this option, you can take the next step in finding a home that fits your family’s needs without feeling rushed.
Seizing opportunities
In a thriving real estate market, lucrative prospects can emerge unexpectedly. If you come across a property you are interested in acquiring, whether for investment purposes or to serve as your future residence, you may be unable to afford the luxury of waiting for your current property to sell. A bridging loan allows you to seize the opportunity swiftly, ensuring you do not miss out on a potentially excellent investment.
Now that you understand the scenarios where bridging loans are involved, let’s examine how they work.
1. Valuation and loan assessment: First, the lender assesses both your current property and the property you plan to purchase. This gives them an idea of the sale value of your existing home and whether it’s adequate to cover the bridging loan.
2. Loan approval: Based on these valuations, the lender will approve your bridging loan amount, which covers the cost of purchasing the new property. With Funding, this approval process is quick and transparent, ensuring you can move forward without delay.
3. Interest-only payments: During the bridging period, you typically only pay interest on the loan, giving you a much-needed breathing room while you sell your existing property. You aren’t stuck with two total mortgage payments simultaneously, which eases the financial pressure and allows you to focus on the transition.
4. Sale of current property: Once you sell your current property, you use the proceeds to repay the bridging loan. If the sale price exceeds your expectations, any surplus can go towards the mortgage for your new property.
5. Transition to a traditional loan: After selling your old property, you can transition your new property into a traditional home loan, securing a long-term financing solution with more manageable repayment terms.
Buyers often feel overwhelmed when dealing with multiple properties and finance arrangements. Here’s how bridging loans address common pain points.
The most significant concern people have about bridging loans is the possibility of managing two mortgages at once. While you hold two properties temporarily, bridging loans typically involve interest-only payments on the new property, reducing financial strain during the transition.
A Bridging Loan allows you to pay only the interest during the loan term, which keeps monthly payments low and manageable while you await the sale of your old home.
Many buyers feel anxious about securing funds quickly enough to act on a property purchase. In competitive markets, delays in finance approval can mean missing out on your dream property.
At Funding, we offer rapid loan approvals, using technology to fast-track the process. Once approved, you can settle in as few as three days, giving you the confidence and flexibility to act on time-sensitive property purchases without delay.
Selling a home can be unpredictable, particularly in a fluctuating market. Buyers may feel nervous about whether their home will sell quickly or for the expected price.
Funding understands the complexities of the Australian property market, which is why our bridging loans offer flexible terms of up to 24 months. This timeframe gives you security and peace of mind when waiting for the right buyer and a favourable sale price.
Let’s explore three real-world scenarios where bridging loans make all the difference.
John and Mary, a retired couple, decided to downsize from their large family home to a more manageable townhouse. They found a perfect property near the beach, but their family home needed renovations before it could go on the market. Instead of rushing through the sale, they applied for a bridging loan through Funding. With quick approval and interest-only payments, they secured their new townhouse. A few months later, they sold their family home competitively, paid off the bridging loan, and moved into their new place without financial stress.
Jessica and Tom were expecting their third child and needed more space than their current two-bedroom home could provide. They found a four-bedroom house with a large backyard in a great school district but hadn’t yet sold their smaller home. To avoid missing out, they secured a bridging loan with Funding. The loan allowed them to move into the new house while preparing their old property for sale. Once the sale went through, they used the proceeds to repay the bridging loan and transitioned to a traditional home loan for their new home.
Ben is a property investor who regularly buys and sells properties. He spotted an undervalued property at auction with solid rental potential but didn’t have time to wait for his current investment property to sell. Ben turned to Funding for a bridging loan, securing the funds to purchase the new property within days. A few months later, he sold his old investment property, paid off the bridging loan, and retained ownership of the new asset, which was now generating rental income.
Regarding bridging finance, you need a lender who understands the nuances of the Australian property market and can move quickly to secure your financing. Here’s why Funding stands out as the best choice for your bridging loan needs:
Fast approvals and settlements: At Funding, we use innovative technology to streamline the loan approval process. You can expect rapid decisions and settlements within three days of approval, allowing you to act fast in competitive situations.
Transparent, flexible terms: We offer flexibility in loan terms, giving you up to 24 months to sell your existing property. Our transparent loan structure ensures you know what to expect at each step.
Personal service: We prioritise personal service, ensuring our expert team can answer your questions and guide you through the bridging finance process. We’re committed to making property finance simple.
Better than traditional lenders: At Funding, unlike traditional lenders, we offer a quick and personalised experience. Through advanced technology, we fast-track approvals and provide settlements within days. Our flexible loan terms and tailored service focus on your unique situation rather than applying a one-size-fits-all approach. Avoid delays and red tape with big banks—move forward faster and more confidently with Funding.
How long can I take out a bridging loan?
Bridging loans are typically available for 1 to 24 months, depending on your needs. This timeframe offers flexibility and ensures you have enough time to sell your current property.
Do I need to repay the entire loan before the term ends?
No, you only make interest payments during the loan term. The total amount is repaid once your existing property sells.
Can I apply for a bridging loan if my property has yet to sell?
Yes, bridging loans are designed specifically for buyers who still need to sell their homes. You can use the loan to secure your next property while your old one is on the market.
Ready to secure your next property without delay? A bridging loan from Funding could be the perfect solution. Whether you’re downsizing, upsizing, or jumping on a market opportunity, our fast, flexible, and transparent approach to bridging finance ensures you can move forward faster with confidence.
Explore our bridging loan options and speak to a consultant today.
DISCLAIMER: The information provided on this page is for general informational and educational purposes only and is never intended as financial advice. While we strive to ensure that the content is accurate and up-to-date, it may not reflect the most current legal or financial developments. Always consult with a qualified financial advisor or professional before making any financial decisions. Use the information at your own risk.
