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What is a Bridging Loan?
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Wanting to know if you can buy your home before you sell? Well it could be possible with a briding loan for house purchase.
What is a bridging loan? We go through bridging loans explained.
00:00 What is a Bridging Loan?
01:50 1. What Are Some Pros Of A Bridging Loan?
03:33 2. What Are Some Cons Of A Bridging Loan?
04:51 3. Bonus One Extend Settlement Period
05:32 4. Bonus Two Renting Out Your Home
05:48 5. Bonus Three Mum And Dad
If you’re looking to move houses then you’ve probably heard of the term “bridging finance”. We break down exactly what a bridging loan is, and how a bridging loan works.
A bridging loan is when you require finance to purchase a second property with the intention of selling the existing one. A bridging loan is typically an interest only payment home loan with a limited loan term. The extent of the bridging loan is calculated on the equity in your current property.
It is an additional home loan that you take out on top of your current home loan until the property is sold and the loan can be closed. This means during the bridging period you have two loans and both loans are being charged interest.
Some loan structures only require you to make repayments on your original loan until settlement. During the bridging period, the interest on the bridging loan gets added to your ongoing balance on your bridging loan but you don’t have to make repayments on it until your existing property is sold. Other loan structures require you make payments on both loans from the time you open the new loan.
When your current home is sold, the bridging loan is converted into your chosen home loan for your new property.
It should be noted the interest is compounded monthly, which means the longer it takes to sell your property, the more interest that will accrue. You will also need to check the bridging period, which is usually six months for purchasing an existing property and 12 months for a new property, as lenders can charge a higher interest rate if you don’t sell your property within this time frame.
DISCLAIMER:
This video offers no Legal, Financial and Taxation advice, and the information contained is general and does not take into account your personal situation. The Listener acknowledges, consents and agrees to the viewing of the content presented on the Channel is subject to the full Disclaimer (below) and agrees to be unconditionally bound by this Disclaimer.
What is a bridging loan? We go through bridging loans explained.
00:00 What is a Bridging Loan?
01:50 1. What Are Some Pros Of A Bridging Loan?
03:33 2. What Are Some Cons Of A Bridging Loan?
04:51 3. Bonus One Extend Settlement Period
05:32 4. Bonus Two Renting Out Your Home
05:48 5. Bonus Three Mum And Dad
If you’re looking to move houses then you’ve probably heard of the term “bridging finance”. We break down exactly what a bridging loan is, and how a bridging loan works.
A bridging loan is when you require finance to purchase a second property with the intention of selling the existing one. A bridging loan is typically an interest only payment home loan with a limited loan term. The extent of the bridging loan is calculated on the equity in your current property.
It is an additional home loan that you take out on top of your current home loan until the property is sold and the loan can be closed. This means during the bridging period you have two loans and both loans are being charged interest.
Some loan structures only require you to make repayments on your original loan until settlement. During the bridging period, the interest on the bridging loan gets added to your ongoing balance on your bridging loan but you don’t have to make repayments on it until your existing property is sold. Other loan structures require you make payments on both loans from the time you open the new loan.
When your current home is sold, the bridging loan is converted into your chosen home loan for your new property.
It should be noted the interest is compounded monthly, which means the longer it takes to sell your property, the more interest that will accrue. You will also need to check the bridging period, which is usually six months for purchasing an existing property and 12 months for a new property, as lenders can charge a higher interest rate if you don’t sell your property within this time frame.
DISCLAIMER:
This video offers no Legal, Financial and Taxation advice, and the information contained is general and does not take into account your personal situation. The Listener acknowledges, consents and agrees to the viewing of the content presented on the Channel is subject to the full Disclaimer (below) and agrees to be unconditionally bound by this Disclaimer.
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