Need a short-term loan to secure your dream home? Bridging finance is an option.

Once the ugly step-sister of the finance family, astute borrowers know the true value of a bridging loan and use it to turn their dreams into reality.

A bridging loan is an additional mortgage taken out on your current property, for a short period of time (12 months maximum). Most lenders will require you to have some equity in your home before approving a bridging loan. Also, the interest and fees are usually higher when compared to a standard home loan.

So when would you use bridging finance?

You’re out on your daily walk, watching the sun sink into the Indian Ocean, when you see a new For Sale sign on a beachfront property. It’s the house you’ve always dreamed of owning and now the chance has presented itself. The only problem is, your property isn’t quite ready to put on the market. It needs a coat of paint and some minor work doing to it in order to get top dollar. You’re in a sought-after street, close to the schools, so finding a buyer isn’t going to be the problem. The beachfront property isn’t going to stay on the market long.

This is a perfect scenario for when bridging finance is a great option.

The buyer needs short-term finance to buy a new property and will be able to repay the loan in full when they sell the current property. As the loan is for an existing house, the loan period is only for 12-months maximum. Interest only repayments are made during the finance period, with the final payment being principal and interest.

If you want more information on bridging finance…

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