If you are looking at trading up properties, it can be more convenient to buy a home before you sell your existing house. This situation can arise when you have come across your dream home and don't want to miss out. If you do not have cash to cover the purchase you may consider some type of briding loan facility.
This is where a bank or lender organises a temporary loan to help pay for the purchase and traditionally these are called a briding loan/mortgage. If you have approached your bank and have had this declined, be sure to check with a good mortgage broker before giving up. Some banks do have very different criteria when it comes to this type of lending.
The products below are available at the time of writing this article please contact the writer or your lender to find out what is available on offer today. All loans are subject to a full application.
Open Ended Bridging
Good for:
When you have no offers yet on your current home but feel like it should sell within the year and you really want to move into a new home.
Whats required:
You need to have equity of 20% over all the properties even after the additional costs are added to the loan amount over one year.
You need to be able to service the debt which will be left over after you sell.
This product is intended for home owners who are moving into another property, not suited for investors trying swap properties
Bridging with exit
Good for:
When you have an unconditional offer on the property you are trying to sell, but want to move into a new property at the earliest.
Whats required:
An unconditional sale and purchase on the existing property, with ideally a deposit. The ability to service the debt which will be ungoing, after both settlements.
Other tips
If you are on a low rate but need to change homes, you can swap securities at some of the banks and keep the old rate. Even if the house your sale comes first, ask the writer or your current lender about this.