New to bridging finance? We’ve got you covered.
Bridging loans, also known as bridging finance, offer a solution for those needing short-term funding, particularly when transitioning between property transactions. Whether you’re buying a new property before selling your current one or covering expenses while awaiting other financing, bridging loans can help you bridge financial gaps with ease.
We’re here to answer some of the most frequently asked questions to help you understand how this financing option works and how it may be beneficial to you as a property buyer or seller.
First up, what exactly is a bridging loan? A bridging loan is a short-term loan that provides temporary funding to help you transition between property transactions. In property purchases, it allows you to unlock the equity or ‘locked-up’ value in your current home to finance a new property purchase or cover related expenses before your existing property sells.
Property Credit’s maximum loan amount/ lending facility is based on the equity in your current home. Once your existing property is sold, you simply repay your bridging loan, making for a smooth transition.
Bridging loans are often processed faster than standard home loans because they’re designed for short-term needs. Approval can generally take anywhere from a day to a few weeks, depending on the lender and the applicant’s financial situation.
Property Credit offers fast bridging loans across Australia and New Zealand, with funds available usually within 24 hours.
The approval process for a bridging loan is generally much quicker than that of a standard home loan. Since bridging finance is short-term, lenders primarily focus on your ability to repay within the loan period.
Property Credit assesses the value of the property you’re selling and considers what stage you’re at in the selling process (whether your property is unlisted, listed, or under an unconditional contract). This approach allows for a faster, more flexible process with no need for credit checks, making it easier for you to secure the funds you need promptly.
Interest rates on bridging loans are typically higher than standard home loan rates due to the short-term nature and subsequent increased risk. Rates can vary significantly, so it’s wise to compare options.
Property Credit offers a unique approach by not charging interest at all. Instead, we charge a straightforward monthly fee that’s only payable upon settlement. So there’s nothing to pay until your property settles, giving you the financial breathing space to focus on selling your home. Additionally, Property Credit allows you to access more funds progressively as your property sale advances, providing flexibility and control over your finances during the transition.
The minimum deposit required for a bridging loan varies depending on the lender and type of finance.
We do things a little differently! Instead of a traditional cash deposit, Property Credit assesses your eligibility based on the equity in your current property. We allow you to access up to 80% of your property’s value, depending on the stage of your sale process. This approach provides a flexible way of securing funding without needing upfront cash.
Loan terms for bridging finance vary by lender.
Property Credit offers flexible terms with no minimum loan duration and a maximum term of six months, providing you with ample time to sell your property. This flexibility allows you to manage your transition at your own pace, without unnecessary pressure.
Again, eligibility will vary by lender.
At Property Credit, applicants must be actively selling their property and have a signed exclusive sales agreement with a licensed agency.
Bridging loans are ideal for sellers needing immediate access to funds to secure a new property or meet other financial commitments. They’re intended for immediate needs, and lenders typically charge higher rates to compensate for the short repayment window. Consider the benefits, like being able to buy or sell a property quickly without the financial hurdles, outweigh the costs for your specific situation.
Visit property.credit for more information on our services or you can contact us on 1300 829 536 (au) or 03 668 2144 (nz).
This article is for general information purposes only and is not intended as financial product advice. Consider seeking independent financial advice that relates to your individual circumstances.
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