Hi all,
Am wondering if anyone knows anything about bridging type loans. The situation is this. We own our own place (no mortgage [strum] yay) and tonight we saw a house and put in an offer on it (we had pre approval loan) and we probably would of got it- but the owner would not accept the clause “subject to our property being sold”.
So now we are frantically trying to see if we can get a bridging loan.
We have the deposit no problems there but the vendor wants the remainder in 30 -60 days and there’s no guarantee that we would sell our property in that time.So is it possible to get a bridging loan ?- does anyone know the best ones (simple ones, no frills our last mortgage was with ING before we paid it off- not sure they do bridging but will phone them tomorrow) obviously it would only take a few months to sell our place so we would put that money straight on the new property.
How long would it take to get one? I’m kind of loving the house LOL!!!Does any of this make sense??[blush2]
Thanks,
Bluemist.Bluemist.
Hi Bluemist. There’s a few options you could look at, and the folowing questions/thoughts are just that, not financial advice.
Firstly, true ‘bridging type’ finance is good to stay away from in my personal opinion unless there are no other options and you ‘just have to’. However, if you own your existing place outright, and are planning to sell, why not simply make your clause ‘subject to finance’ and go ahead and take out a good, no frills loan on the house you want to buy, using either your deposit or equity in your current home? As long as you can service the loan, I imagine you would have people chasing you to lend money! Then at your own leasuire you could sell your existing property, without ‘rushing into it’. and likely get a better price with a few emotions out of the equation. I imagine as soon as you sold the property, you would then put all the money into the loan. If this would pay the loan off outright, you would want to make sure you get a loan that has no, or very low exit fees, as in all fairness lenders want you for the long term, not to pay out a loan within 3 mths!. If this was the case, you would be better paying a slightly higher interest rate, than a low/discounted rate with big exit fees (sometimes called ‘deferred admin/application/establishemtn fees…all mean the same. For example, a 1% DEF on a 350k property is $3500 !!! Not a prob long term though as they usually only apply for three of four years.)
Congratulations on owning your own home outright though as this presents you with a few options, and don’t be afraid to ask plenty of questions from your lender, or via this forum.
All the best. [strum]Hi Bluemist
If you are happy to offer you own property as security then why not borrow the full amount inclusive of costs through a standard mortgage rather than bridging loan.
If you merely want to use the house you are buying as security then offer a deposit and do similar. Anything over 80% will require LMI hence the suggestion of offering 2 securities.
30 days is fine to settle a transaction depending on what State you in as most of the loans i arrange for clients have similar settlement dates.
I concur with V8Ghia and would try and avoid bridging loans if you can help it. Either way if you only need the funds for a short period of time then it is likely you will incur some form of DEF but to secure the property it may well be worth it.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner.
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
We own our own place (no mortgage [strum] yay)tonight we saw a house and put in an offer on it (we had pre approval loan)No need for a bridging loan.
Just use the loan you already have approval for.
When you sell you existing home, then pay back the other.I would suggest you get a loan from a bank that does not have break costs. talk to your broker
Regards
JohnInspired Finance
(02) 9944 7776Hi everyone thanks for your replies.
As it turned out we could get pre approval for some loan- can’t use existing approval as it was for an amount that assumed we had sold this place. (I resigned from work and was the major $$ winner so its just my hubby’s wage which is less than half of what I earnt).In the end some one else put in an offer (possibly lower than ours) and they have accepted it- because apparently they have bought two properties and need to get out quickly. But if it doesn’t go through they will call us.
However, am over not getting the house as I now realise there are alot more options than I thought. I had no idea so we are now going to have a look around and see what we can do.
Thanks everyone I am really appreciative of your advice….so much to learn…so much to learn
Bluemist.
Bluemist.
Even if your income is reduced due to one person not working you still have options whereby you can borrow against the property (asset lending) or called a no doc loan. You do not need to provide income details and can easily borrow up to 70% of the value of your house. So you borrow on your own house and use those proceeds as deposit for the next house plus purchase costs. You keep a portion in reserve for loan repayments just in case your partner does not return to work in the short term
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