Bridging Loans

Can you please let me know what to consider and be aware of when taking bridging loan?? I would really like to buy house first before selling (PPOR) to avoid moving with 3 kids (where to?) but then finance comes as a problem. The only solution is to take bridging loan I think....

I understand that for example, I buy house for 1M and my current mortgage is for 400K, expected sale price 800K I would have to take mortgage and bridging loan for how much exactly??

There is a risk of not selling, but in today's market with 80% clearances on auctions, I think risk is less then to sell and rush to buy any house in minimum amount of time....

Please share your experiences and opinion with bridging loans or is there any other, better solution??

Thank you
 
Bridging loans are plan e when plan a, b, c and d fail.

Servicing permitting its better structure the application as if you are keeping both properties and renting out one.

Which lender is this?
 
Bridging requires a fair bit of euity to work.

many times, other options work just as well if there is sufficient equity and ok serviceability

ta

rolf
 
In 10 years I've written only 1 bridging loan. In every other buy-sell situation we've been able to find a far easier (and cheaper) solution. That one deal was also an absolute nightmare. I'd be very surprised if a bridging loan is the best solution.
 
what to consider?

Consider doing an investment purchase instead.

If you still want to do bridging, use a lender who has a bridging product. The big four dont. They do it by exception, and require term deposits held, perhaps a guarantee from a family member and a whole lot of other guff.

Adelaide bank, Rams and St George/BOM are some of the lenders who have a true bridging product.
 
Thank you for all your replies.... I am really unsure of what to do...

I have aprox 50% of equity

I am also considering this for my parents, and they dont have any mortgage on their house.
 
with 50% equity...request for an cash equity release without selling..enough for 20% + Stamp duty on the new purchase.

Apply for loan on the new purchase at 80% as per normal.
Move into new place at your own leisure....and sell the old place, place the funds into the new offset account. DONE.
 
with 50% equity...request for an cash equity release without selling..enough for 20% + Stamp duty on the new purchase.

Apply for loan on the new purchase at 80% as per normal.
Move into new place at your own leisure....and sell the old place, place the funds into the new offset account. DONE.

assuming serviceability and the upgrade isnt from St Marys to Vaucluse :)

ta
rolf
 
with 50% equity...request for an cash equity release without selling..enough for 20% + Stamp duty on the new purchase.

Apply for loan on the new purchase at 80% as per normal.
Move into new place at your own leisure....and sell the old place, place the funds into the new offset account. DONE.

That sounds much better yes... will have to talk to my broker again :) Thanks Mick

Its not from St Marys to Vaucluse but close to that, pricing wise looking to spend maybe 200K more then current value of house
 
I am really unsure of what to do...

Hey Nem,

Discuss your situation in more details with a mortgage broker. Some of the best brokers on the forum just replied to you. Give them a ring. They will just be more than happy to help. :)
 
Done a reasonable amount of bridging loans. Haven't had any issues with them. No cost extra with CBA then any other loan. Only difference is you're contractly obliged to reduce debt to an agreed amount by a certain time (maximum bridging period 12months)

As mention above in most cases you can structure to keep out of bridging by showing that one of the properties could be rented out.

If you can't show that you can service the debt even by renting one property out then will need to be bridging. CBA will allow you to borrow the costs (if you have available equity) if there is a shortfall in servicing.
 
Thank you for all your replies.... I am really unsure of what to do...

I have aprox 50% of equity

I am also considering this for my parents, and they dont have any mortgage on their house.

So many ways to solve this that don't require bridging. If bridging is the best solution available then one of the two applies:

a) Your financial situation is really, really messed up (pretty rare to be that bad).
or
b) Your broker is not very good at problem solving.
 
I think my broker looked into it, but serviceability could be the problem...

would same requirements apply for releasing equity as getting bridging loan?
And no, my credit file is not bad at all :)
 
So many ways to solve this that don't require bridging. If bridging is the best solution available then one of the two applies:

a) Your financial situation is really, really messed up (pretty rare to be that bad).
or
b) Your broker is not very good at problem solving.

Pete care to share how you get around serviceability issues, someone changing PPOR, low income/serviceability and large equity.
 
some lenders only calculate their servicing on 'end debt'. They arent fussed what the peak debt repayments might be, because there is an obligation to sell within a set period.

CBA and the other big four arent one of these lenders. They do bridging by exception, it isnt a seperate product, the same policy applies. they have to have funds to cover the serviceability shortfall for the peak debt, etc etc.
 
So many ways to solve this that don't require bridging. If bridging is the best solution available then one of the two applies:

a) Your financial situation is really, really messed up (pretty rare to be that bad).
or
b) Your broker is not very good at problem solving.

Pete care to share how you get around serviceability issues, someone changing PPOR, low income/serviceability and large equity.

Pete still interested in hearing how.
 
Back
Top