Seize opportunities with a bridging loan

Found a new home but struggling to sell your own? A Bridging Loan could be the answer for you. Bridging loans can help you to finance a new property fast, even if you are still paying off an existing mortgage. Don’t miss out on securing your dream home – get a bridging loan.

Easy repayment terms

Easy repayment terms

Minimum qualifications

Minimum qualifications

Fast processing

Fast processing

Your new mortgage can cover the bridge loan.

Your new mortgage can cover the bridge loan.

What is a bridging loan?

Most commonly, the proceeds of bridging loans are used as a down payment for a new house. This can bring opportunities:

Avoid the stress of trying to match up settlement dates. Increase the chance of selling your existing home at a reasonable price, without time pressure.

Avoid the stress of trying to match up settlement dates. Increase the chance of selling your existing home at a reasonable price, without time pressure.

Avoid losing out to fellow buyers who do have the funds available to purchase the property in question.

Avoid losing out to fellow buyers who do have the funds available to purchase the property in question.

The bridging loan process

peak debt bridging loan

So how does a bridging loan work? Let’s say the balance of the loan on your existing property is $250,000. The funds required for the new property are $600,000. You may be able to borrow up to $850,000, which will be your peak debt.

end-debt-bridging-loan

You now have a short-term debt of $850,000, on which interest is payable, while you wait for the sale of your existing property. If the net proceeds of the sale of the existing property are $500,000 and you put that full amount towards the Peak Debt, then you will be left with an End Debt of $350,000.

From this point on, you’re just on a standard mortgage product with regular repayments.

Why get a bridging loan?

The reality is that there’s a certain amount of uncertainty in the housing market. Bridging finance allows people to buy a new home while they are waiting for their current home to be sold.

In some instances, when your existing property sells, the sale price can be used to pay off your bridge loan. By doing so, you can finance your home purchase smoothly and save a lot of money. You are also likely to save on mortgage rates. This is because most mortgage products with low down payments charge very high-interest rates.

All of your property-related costs can be tied under one consolidated payment. Including stamp duty, legal fees, and inspection fees.

why get a bridging loan

Types of bridging loan in Australia

Closed

If you’ve already found a buyer for your existing home, you can get a loan based upon the pre-agreed sale date. Following this, the remainder (if any) of your bridging loan can be paid. This is suitable when a sale has already been locked in.

Open

Generally, this type of bridging loan is for when you’ve found an ideal property and want to make an offer. Yet, you’ve not yet negotiated the sale of your existing property or when it’s not yet on the market. So long as you are confident in the valuation of your home and have a good level of equity in your property, then an open bridging loan can be a possibility.

How can I use a bridging loan for my business?

Bridging loan for business

For start-ups and companies experiencing financial strain, bridging loans can be a good option. Perhaps you are unable to provide income tax returns for the past three years. Or maybe you are having difficulty proving that your business is doing well. Whatever the reason – if you’re struggling to get standard loans approved, then bridging loans can be a great alternative.

Instead of waiting for your next mortgage to be approved, or for your cash flow to grow dramatically, you can apply for a bridging loan to secure the new asset you want to purchase. Don’t let small setbacks prevent your business from growing. Instead, take advantage of the benefits that bridging loans can bring.

How do I qualify for a bridging loan?

Bear in mind that ALC Commercial are flexible, so we will always try to find a way to help you.

Have as much equity in your existing property as possible

Bear in mind that ALC Commercial are flexible, so we will always try to find a way to help you.
Similar to when applying for a standard refinance, you’ll need to provide financial evidence. Including: current income, employment status, expenses and other supporting documents.

Provide supporting information

Similar to when applying for a standard refinance, you’ll need to provide financial evidence. Including: current income, employment status, expenses and other supporting documents.
You will need to provide a deposit in order to be granted a bridge loan. The amount will be discussed during the application process.

Set some money aside for a deposit

You will need to provide a deposit in order to be granted a bridge loan. The amount will be discussed during the application process.
These range between 6 months for purchasing an existing property and 12 months for a new property. Interest is built up monthly, so the faster you pay off your bridging loan, the less interest that will accumulate.

Understand bridging periods

These range between 6 months for purchasing an existing property and 12 months for a new property. Interest is built up monthly, so the faster you pay off your bridging loan, the less interest that will accumulate.

Have a good credit score

While a good credit rating is desirable, Bad Credit Loans specialise in providing financial support to those with a lower score.

Apply for a bridging loan with ALC Commercial today, or take a look at the Other Services that we might be able to help you with. If you have a bad credit rating then Bad Credit Loans might be able to help you.