- You can confidently search for a new home even though you have not made a settlement on your existing property.
- You can choose between principal and interest, or interest-only repayments.
- You can use the proceeds from the sale of your home to reduce the balance on your bridging loan following the settlement.
- You can make unlimited lump sum payments, depending on the terms of your finance.
- You can purchase a new property and not have to sell your existing property first.
- If you are building a new property you can still stay at your existing home till completion of construction.
- A bridging loan term of six months means less pressure to sell quickly.
- You get a flexible repayment plan to suit your individual needs.
In order to qualify for a bridging loan, you will require to have sufficient equity in your homes. Not having sufficient equity is the reason why people find it difficult to sell their existing home. This means that the interest they end up paying on the bridging loan keeps building up considerably.
Minimum repayments, during the sale of the existing home, are usually calculated on an interest-only basis. You may even be able to capitalize all the repayments until the sale is completed depending on your lender. But you must keep in mind that if you do so then it will increase your Peak Debt and, therefore, increase the overall interest that you will pay.
It is recommended that you make some repayments wherever possible so that if you have any difficulties during the sale of your property, you would not have repayments for another six months added to your loan amount. Instead, the amount that needs to be added to your loan will be reduced by whatever amount you have already paid.
You can calculate your potential minimum repayments with the help of our Basic Loan Repayment Calculator and anticipate any changes in the near future.
Your loan serviceability is calculated depending on your ability to repay the end debt.
Your lender may allow you to choose either to capitalize your repayments by adding them to the total amount of the loan or to continue and pay them. If you continue to make repayments, then it will stop the total amount of the loan from billowing and limit the amount of additional interest from being charged.
You can check your repayments with the help of our how long to pay calculator here.
When taking a bridging loan, you will have about six months to sell the existing property or even a period 12 months, if the new property is still under construction. If you are unable to sell off your property within the above mentioned time periods, then the loan will be reviewed and new arrangements might need to be put in place.