Guide to bridging loans
Found your dream home but haven’t sold your existing property? Is your bank taking too long to give you mortgage approval? Are you looking to renovate and then sell? A bridging loan could be for you.
At Bridgit, our loans are tailored to property owners looking for easy, stress free solutions. We aim to cut through the red tape imposed by traditional lenders and help you get to the next stage in your property journey quickly and with little fuss.
Here is our simple guide to common questions asked about bridging loans.
What is a bridging loan?
A bridging loan is a short-term finance solution designed to ‘bridge’ the gap between the purchase of a new property and the sale of your existing home.
When do I need a bridging loan?
When you want to buy a new property but have not sold your existing home. Therefore you wish to use the equity in your current property to make your new purchase, whether you are upsizing or downsizing. A bridging loan helps do this for you.
How does it work?
In simple terms, the loan is secured against your existing property and the new one you are looking to purchase. When you sell your existing property, you repay your bridging loan. This is where the term ‘bridge’ comes from - the loan is seen as a bridge from one property to another.
How much can I borrow with a Bridgit loan?
The maximum amount you can borrow is 75% of the existing property and the current property value, this is what we call the loan to value ratio (LVR). Once you apply with us, a valuation is done on both the current property and the new one which then determines the maximum LVR, plus we look at how much you need to borrow.
How long is the bridging loan period?
At Bridgit, we offer a six-month bridging loan. We offer this period to allow you enough time to move into your new home and sell your existing property.
Benefits of a bridging loan with Bridgit
Bridgit is uniquely set up to offer nothing but bridging loans. Our criteria and benefits are tailored to this market and may differ from other lenders. Our team is based in Australia and understands your needs. Buying your next dream home using a Bridgit loan, will look a little like this:
How much interest will I pay?
At Bridgit we do it a little differently by offering the first 3 months interest free with a set up fee of 1.65% of the loan amount, this means you don’t constantly have interest building up. Thereafter the loan reverts to a 5.99%p.a. interest rate (6.16% p.a. comparison rate^).
What happens when I sell and am ready to settle the bridging loan?
When you sell your existing home and reach settlement on your Bridgit loan, there are two ways it can play out. Whichever way, we are here to help you.
How can I use a bridging loan to renovate?
If you wish to renovate your home prior to selling it, Bridgit can assist with an equity release to cover the value of the work. If you have an existing mortgage, we will need to refinance it to provide the loan as we use the property as security. Once renovations are complete you simply sell and pay off the loan.
Scenarios where a bridging loan can help with your purchase:
Can I use bridging finance if I have an existing mortgage?
Yes, the bridging loan will need to cover the existing mortgage and the new purchase. If you need another long-term mortgage once you have sold your property, you simply refinance to a standard home loan with another lender.
Can I use a bridging loan if I am downsizing and have no mortgage?
Yes, this is a perfect bridging scenario. You use the existing equity in your property to downsize into a new home on your terms, then sell.
Can I use a bridging loan if I am self-employed?
We do our best to lend to everyone, no matter their employment status. If you are self-employed, we require either:
Timing can be key:
Often with a bridging scenario you need to move quickly. Your settlement may have unexpectedly been moved OR you have found that dream home to buy and don’t want to miss it.
At Bridgit, we have disrupted the traditional Australian lending market to help with bridging loans like this which previously could take up to three months to approve. Using technology to speed up the application criteria and process loans quickly, we pride ourselves on aiming to offer same day approval.
Is the application process the same as a 30-year loan?
Our application process is quick and easy. The technology we use allows your loan information to be processed much faster than a traditional home loan.
Simply complete the online application process and if Bridgit it right for you, receive same day approval.
For downsizing scenarios or when you do not have a mortgage on your existing home, there is no need to provide documentation on income and expenses. We complete the necessary valuations to ensure we are confident your property has the value to cover the loan.
Bridgit is the newest bridging loan lender in Australia, and we solely focus on bridging which puts us in a unique position.
^ Comparison rate calculated on a $150,000 secured loan over a 25-year term. WARNING: Comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Comparison rates for interest only loans will not reduce your loan balance. This may mean you pay more interest over the life of the loan. 1.65% set up fee and government charges apply.
Eligibility and approval is subject to standard credit assessment and not all amounts, term lengths or rates will be available to all applicants. Fees, terms and conditions apply.
When negotiations for a same-day settlement fell through, this homeowner’s broker reached out to Bridgit in need of urgent bridging finance.
Bridgit has been named a finalist in the Best Lending Innovation category of the Finder Innovation Awards 2023 – the same category it won last year.
Bridgit has won the title of Best Lending Innovation at the Finder Innovation Awards 2023. This comes hot on the heels of news that Bridgit was a finalist in Finder’s annual awards program, which recognises Australia's most forward-thinking businesses.