BRIDGING LOANS FOR PERSONAL USE
A bridging loan is a short term loan that can be taken out on top of your current home loan until the property is sold. It is a very fast and easy way to access your equity during the sale period.
A Mango Mortgages bridging loan can also be an ideal solution if you need to ‘bridge the gap’ between purchasing your new home and selling your existing one.
With the help of financial institutions, the selling and buying of properties are now readily accessible. If you are dealing with investments, loans and other financial transactions, financial companies can assist you in finding the best solution. You can take advantage of their financial schemes, such as loan programs, to either buy a property or settle an existing mortgage.
Bridging Loans: Key Advantages And How Do They Work? | Mango Mortgages
Many financial loan options will best fit your needs. These loan programs provide customers with payment flexibility and greater buying power. When you are buying a new house or a property but still paying for an existing loan, you can consider applying for bridging loans.
A bridging loan is designed to help property owners like you secure a second property while waiting for funds to become available, such as funds from selling the first property. This means that if the loan were approved, you would have two loans that are generally being charged with interest on both.
Hence, when considering applying for a bridging loan account, you should choose a company that has an excellent service record.
We, at Mango Mortgages, have been in the business for years, backed up with a highly experienced team of professionals. As part of our service, we are committed to provide you with loan flexibility and give you a wide range of options. If you are seeking an expert's advice or urgently need a loan, get in touch with us. Call us at (02) 9555 7073.
Different Types of Bridging Loans and Their Purpose
With the help of financial institutions, the selling and buying of properties are now readily accessible. If you are dealing with investments, loans and other financial transactions, financial companies can assist you in finding the best solution. You can take advantage of their financial schemes, such as loan programs, to either buy a property or settle an existing mortgage.
People opt to use bridging finance because of its flexible terms. This is even popular to landlords and property developers because they can avail of the fund to develop properties and then sell them at a quick pace. Bridging loans can be used in the following:
Buying a property
Developing a property
Settling a divorce
A bridging loan can be an open or a closed bridge loan type. An open bridge loan has no specific end date. In this case, the borrower can pay the loan whenever the funds become available, which makes it preferred by borrowers who are unsure of the availability of their funds. It is also important to note that an open bridging loan comes with a higher interest rate.
A closed bridge loan, on the other hand, has a fixed date and is suited for individuals who have a specific time frame on their mind. This loan type has a demonstrable exit strategy. Given that it has a specific date and strategy in place, borrowers have a clear picture of the transaction. A lower interest rate is also given by credit companies for a closed bridge loan.
Commercial borrowers can apply to both open and closed bridging loans. However, when borrowing, you should first consult with the credit company for the exact fine print of the transaction, so there would be no hidden charges or exit fees.
How Does a Bridging Loan Work?
To understand how a bridging loan works, here are elements that you need to take into consideration.
The loan credit company provides the funds to buy the new property and takes over the loan of the existing property. The lender can also restructure your loan in a way that the term of the original loan can be shortened. Depending on the credit company, some fees would be paid as well.
The money that the borrower owes to the credit company is called the "peak debt". This is the total amount of money that the borrower owes to the lender, the existing loan of your property and the new loan amount that will be used to buy the new property.
Repayments will change during the duration of your loan. In this case, you have to check with the credit company for the payment conditions.
After selling your existing property, the remaining balance of your loan will be the "end debt". This means that the payment of your existing property will be deducted from your principal loan amount. Hence, end debt represents the principal amount of your bridging loan.
Advantages of Applying for a Bridging Loan
Why do many borrowers prefer a bridging loan? It's because of the following advantages.
It's fast to facilitate.
When you need a large amount of money to either buy a property or upgrade a business, a bridging loan can be used to access such an amount quickly. This may take weeks of processing in other financial facilities, such as banks, but Mango Mortgages can make it happen quicker for you. A bridging loan might not immediately require monthly payments for a couple of months.
It has flexible loan criteria.
Although criteria vary among credit companies, a bridging loan has flexible payment terms. Also, most credit companies will look at the value of the property being offered rather than the borrower's income.
All types of property can be used as security.
The good thing about accessing a bridging loan is that the borrower can use any type of property, including a house, apartment, shops, and farms, as security. Even properties that are not in good condition or in need of major renovation can be used.
When you sell your property, you can attract greater buyers.
Through a bridging loan structure, you can avoid the tension of selling your property at a lower price. A bridging loan also allows you to gain ample time to look for the right buyer.
A bridging loan can provide a cashflow injection for personal use when:
Your bank can’t deliver based on circumstance or time, you don’t have financials in order (but have equity in your home or other real estate), or you need short term bridging funds when:
You want to renovate or prepare your property prior to sale
You’d like to complete a small land subdivision or duplex intended for sale
You need a deposit for a new property (investment or principal place of residence)
You require help with moving, living, legal or medical costs
You’re seeking to pay a personal bill or debt that can’t wait until the property is sold
You’re downsizing
Short term bridging loan snapshot:
$25K – $500K+
By caveat, second or first mortgage
Funding typically within 3 – 5 days from application
Loan terms from 2 to 24 months+
Available Australia-wide
No credit check or income assessment
Minimal documentation
Real estate backed (residential real estate required to obtain a loan)
Flexible underwriting
NCCP compliant
Australian Credit Licence 422165 (Mango Mortgages Pty Ltd)
The upside of short term bridging loans include:
- Access the equity in your home within days to help buy your new home quickly or pay deposit on your next residential purchase
- You don’t have to miss out on THAT property while you wait to sell yours
- Avoid the stress of having to sell in a hurry, and by doing so, you potentially get a better price on your house
- Maximise the market value of your home in preparation for sale
- Can help reduce or avoid storage and/ or temporary rental property costs
- Create wealth by completing that small subdivision or duplex
- Fully regulated by ASIC with the extra protection of AFCA membership (Mango Mortgages only)
- Obtain funding for personal purposes
Would you like to take on a bridging loan? Talk to the experts and see which will fit you.
We, at Mango Mortgages, can provide you with options for your lending needs. We are here to help. Contact us at (02) 9555 7073 or send us an email at info@mangocredit.com.au.