Bridging loans - help!!!!

[pennyc]

Our house is set to go on the market the weekend of an auction of a house I love. I am trying to negotiate a 90 settlement if we are successful at the auction. It is believed our home should not take long to sell in the current Melbourne market so I may not need bridging finance.

However..... in the case of the person buying our home needing 90 days or just taking that little longer to sell I am wondering what experience people have with bridging loans. Are they hard to get? I imagine we would need it at most for 1 or 2 months. I would never go down this path if I did not adore this home and it is quite unusual so sitting out the auction is not really an option.

I imagine with the current mortgage and the new one our total debt would be $820-$830k (feel sick at the thought)

Before I go to the bank I just wanted to see some peoples experiences. If they can see your home is on the market or even sold will they allow you to have the bridging finance? We have some savings that can cover the loan for several months if need be.

Thank you

 

[Peter_Tersteeg]

Bridging loans require you to show evidence that you can service the end debt. Your overall debt cannot be more than 80% of the portfolio value at any given time. In many cases you can also capitalise the interest during the bridging period.

Most houses are moving fairly quickly at the moment. There's a good chance you'll have a contract within the timeframe in the current market. I've seen it happen a few times recently.

 

[Kristine..]

Our house is set to go on the market the ... I am trying to negotiate a 90 settlement if we are successful at the auction.

Hi Penny

If you are thinking of Bridging Finance be aware that if you have a Contract of Sale on your current property you cannot arrange Bridging Finance

This is because your purchaser would hold an Equitable Interest in the property and lenders will not then take it as part of the security

So if you are thinking of arranging Bridging Finance make sure you do this well in advance of selling your own home

There are other methods than using Bridging Finance and much will depend on your current lender's lending policies and models

Without knowing your actual circumstances it is hard to comment on what may be the most effective finance model for you at this time

Regards
Kristine

 

[Bradsdad]

Agree with Kristine for the timing.

is there a chance you can service both debts if rental income is included on your existing propery? Even if only servicing is according to the lenders calculations.

Regards
Steve

 

[RumpledElf]

Bridging loans require you to show evidence that you can service the end debt. Your overall debt cannot be more than 80% of the portfolio value at any given time.

What happens if you have no intention of taking out an end debt, or the end debt will be too small to get a home loan?

We'd kill for bridging finance - our current house is worth about $180-200k (~$80k owing) and the new build is going to cost us $100k with a final value of $250-300k. But we need finance approval Real Soon Now and I have no idea what path to take, bridging looks the best option since there's the risk of having the new house delayed by weather or whatever and we're stuck homeless once the old house is sold. Option B is simply to rent it out, but then we're a fraction short of a 40% deposit.

 

[pennyc]

Hi

Dont know if these details help at all.

Current house value 530k/loan 280k
Savings of 40k (To put towards deposit on new property)
Bridging loan needed in the order of 580k.
Total income of family $98000

Very good chance we wont need it at all and I would definately like to get it in place as early as next week (another inspection this weekend to be sure we want to stick our necks on the line over this house)

As far as what you say regarding rental income. We would definately not be renting this house out. Are you suggesting we should mention it as a possibility so they can include that income in their assessment of us.

Do you think we could get a lender to agree to say a max of 6 month bridging loan or even 3 months?

Also are there any additional costs to be considered?

 

[Kristine..]

Hi Penny

What is the income breakdown - a family income of $98,000 doesn't actually say much due to the tax free threshold and the incremental nature of income tax rates

Any Family Tax A & B or other income apart from PAYG wages?

Anything you are voluntarily paying which could be suspended for a while eg salary sacrificing to superannuation?

Thanks
Kristine

 

[pennyc]

Income is husband 70k (before tax) Me 15k (before tax) and about 10000FTB which is tax free.

We have no other debts other than our current home loan

 

[tobe]

rumpled elf,
There are a few products around called bridging loans, with no end debt which may be suitable for your circumstances. I'd say the trouble you might have is valuations, and or restrictions on the postcode you are situated in?
The risk with bridging is if your house doesnt sell in the timeframespecified (usually 12 months), the bank has the right to sell it on your behalf, at a price they are happy with.
They are obviously happy with any price that clears their debt after selling costs.....