Bridging LoansA bridging loan offers you an easy way to purchase or build a new home before you sell your existing one. Rather than needing to make two sets of loan repayments while you are selling your existing home, no repayments are required on the new home loan for the bridging period. The length of your bridging period depends on whether you are buying or building your new home:
When buying an established home:
A new loan is established to purchase the new home. You continue to make repayments on your existing loan. In the meantime, interest is charged to your new home loan account as normal. You do not need to make any repayments on that loan for 6 months, or until you sell your existing property, whichever occurs first.
When building a new home:
A new loan is established to purchase the land (if required) and to cover the cost of construction. You continue to make repayments on your existing loan. In the meantime, interest is charged to your new home loan account as normal. You do not need to make any repayments on that loan for 12 months, or until you sell your existing property, whichever occurs first.
How much can you borrow?
You can borrow up to 100% of the value of your new home plus any associated fees & charges. As long as your combined loans do not exceed 80% of the combined value of both your new and existing properties (after taking into account the amount of interest that will be charged on the new loan during the bridging period). Assessment is based on the repayment that will be required once the existing home is sold. The repayment amount will be based on the end loan of:
The loan required to purchase/build the new home; plus
Interest that accumulated on the new loan during the bridging period; less
The agreed amount by which the new loan can be reduced upon sale of the existing property.
Read our article on 'Buying and Selling' by clicking
here.
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