Loan Portability and Bridging Loan Finance
Buying and selling homes simultaneously can be difficult
Ideally you want to be able to settle on purchase and sale as close together as possible. Some lenders offer loan portability, allowing you to take your existing loan with you to the new property – reducing your refinance costs.
However if you have found your new dream home and have not sold your current home, then a bridging loan will help cover any time gap between the current property sale and new property purchase.
Home loan portability is a loan option offered by some lenders, that allows you to keep the same loan and facilities (ATM card, online banking etc) whilst avoiding the costs associated with refinancing.
Essentially the loan remains the same, however the finance is secured against the new property. The amount financed may increase or decrease depending on the equity in your current home and the purchase price of the new property.
A Bridging loan, is a short term loan usually 6 to 12 months, that makes it possible to purchase or construct a new home prior to selling your current home.
Talk to our mortgage specialist as there are different types of bridging finance available depending on which lender you choose, the security for the finance and the repayment options.
Single Loan – Bridging Finance
The Lender uses both properties as security, with a single mortgage covering the existing property and the new property. Different lenders have different repayment requirements during the Peak Debt period.
Dual Loan – Bridging Finance
The mortgage on your existing property is retained and a second mortgage is secured against the new property. In this scenario repayments are required on both mortgages, so it is important that you do not enter this kind of arrangement unless you can support payments on both loans.
Once you sell your current home, proceeds from the sale are used to pay out the original lender mortgage and surplus funds are used to reduce the mortgage on the new property.
Bridging loans allow you to move into your new home straight away. However it is important to be realistic about the sale price of your existing property and how long it may take to sell in the current market, as well as your ability to meet your bridging finance obligations.
If you are unsure of your ability to make repayments on a bridging loan, then talk our mortgage specialist and they will advise you the appropriate structure to suit your financial circumstances. Call 1300 222 667