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 make cosmetic improvements and then sell? A bridging loan could be for you.

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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.

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Here is our simple guide to common questions asked about bridging loans.

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‍What is a bridging loan?

A bridging loan is a short-term financial product designed to ‘bridge’ the gap between the purchase of a new property and the sale of your existing home.  

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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. You can also use a bridging loan to release equity in your home before selling, this can be used for cosmetic improvement for example.

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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.

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Find out more about Bridgit’s rates here

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How much can I borrow with a Bridgit loan?

The maximum amount you can borrow is 85% 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.

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How long is the bridging loan period?

At Bridgit, we offer up to a 24-month loan term. We offer this period to allow you enough time to move into your new home and sell your existing property.

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Find out more about the Bridgit loan

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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:

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• 24 hour approvals
• No monthly repayments
• Simple online application process
• Australian-based credit and customer service team

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Find out more about the Bridgit benefits

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How can I use a bridging loan to make cosmetic improvements?

If you wish to make cosmetic improvements to 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.

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Scenarios where a bridging loan can help with your purchase:

• You want to find a new property on your own terms:
  Take your time and make sure you find the right home by using a bridging loan to buy now, sell later.
• Avoid the hassle of moving multiple times:
  Don’t want to risk having to move, rent and move again? Use a bridging loan to buy now, sell later.
• Settlements don’t line upon the purchase and sale:
  Bridging allows you to access funds securing against your current property to settle the new property, so you don’t lose your deposit.
• Make cosmetic improvements before you sell to add value:
  Use a Bridgit loan to access your home equity for funds to make improvements, then sell.

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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.

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‍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.

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‍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.

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‍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 is right for you, receive same day conditional approval. For downsizing scenarios, or if 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.

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‍Find out more about Bridgit bridging loans here.