The Ins And Outs Of No-End Debt vs End Debt Bridging Loans 

March 28, 2023

Whether you’re a mortgage broker or you’re a customer trying to find the right loan for yourself or your clients, bridging loans can offer increased flexibility and choice. 

As a lesser-known home loan type, bridging loans can seem daunting and confusing to navigate. That’s especially true when we talk about end debt vs. no-end debt bridging loans: they sound complex, but they’re actually relatively straightforward.

End debt bridging loans are a type of loan used when someone is upsizing, whereas a no end-debt loan is used when someone is downsizing and their current home sale essentially pays for their new home. Let’s dive into everything brokers and their customers need to know about no-end debt and end debt bridging loans and what their advantages are. 

What is end debt? 

A bridging loan essentially allows buyers to purchase their next property before selling their current home. The lender takes on both mortgages and bridges the gap in funds to help buyers move on their own terms and save on temporary living costs (while also avoiding the need for two mortgages).  

When someone takes out a bridging loan, the total amount borrowed is called peak debt. It covers the loan on the current home, the purchase price of the buyer’s new home, and any other associated costs. 

After the buyer has sold their existing property, the net proceeds of the sale are then used to reduce the peak debt. Any debt that’s left over is then called the end debt and is repaid like a standard mortgage. 

For example, if the loan on their current home is $300,000 and they need a $500,000 loan for their new home their peak debt will be $800,000. If the net proceeds of the sale of the existing home are $350,000, the buyer puts that towards the peak debt to end up with $450,000 of end debt. 

The pros of end debt bridging loans

An end-debt bridging loan is obtained when a buyer is upsizing from their existing home to purchase their next home. That could mean a growing family upgraded from an apartment to a standalone home or young professionals upsizing from their first home to a larger terrace in the inner city.

In this case, the buyer needs capital to upsize (some of which can be accessed from their existing home) to fund their next move. The difference between what their current property is worth and how much they still have on their existing loan can be used as a deposit for their new home.

With an end debt bridging loan, they can buy their new property first, sell their existing property and then settle their end-debt bridging loan and refinance to a longer-term mortgage (which will be the end debt). 

For brokers, Bridgit’s end debt bridging loans can be a great option to provide clients because they have the option to choose which lender they refinance with for full control with 6 months of breathing room to find a mortgage provider. 

Let’s run through some of the pros of taking out an end debt bridging loan with Bridgit:

  • Choose which lender to refinance the end debt: Bridgit gives you the freedom and flexibility to choose which lender a buyer wants to refinance their end debt with, instead of being locked in with one lender. 

  • 6 months of no repayments on incoming and outgoing properties: with a Bridgit bridging loan, buyers don’t have to worry about paying two mortgages at once because we take over the first mortgage so they can move on their own terms. 

  • Debt consolidation: our loans offer manageability for the customer within a complex time by not having to worry about navigating two loans at the same time. 

  • Removes the need for temporary relocation: if a buyer has found their new home but hasn’t sold their current one, bridging loans can help them skip the hassle of paying rent and moving around in temporary living arrangements in the meantime. 

The pros of no-end debt bridging loans

In some cases, there won’t be any end debt when a buyer takes out a bridging loan. These scenarios typically happen when a person is downsizing

No-end debt bridging loans can be useful for borrowers that don’t have a salary or income, like retirees, but know the sale of their existing home will cover the cost of their new home. 

For example, retirees whose kids and grandkids are older may be thinking about downsizing from a four-bedroom home to a two-bedroom apartment so the sale of their existing home can cover the debt for the new home. 

Let’s take a look at some of the pros of a no-end debt bridging loan with Bridgit:

  • No income serving required: this is great for no-income or low-income earners such as retirees.

  • No income or expense evidence required: if a person is downsizing, no income verification is required to obtain a bridging loan because the customer will have no mortgage repayments to make on either property. This can be helpful from a cash flow perspective and give the buyer breathing room to manage the transition. 

  • Ultra-fast turnaround time: Bridgit’s bridging loans take less than 24 hours to approve so downsizers can make the most out of any purchasing opportunities.  

  • Minimal documentation: Bridging loans with Bridgit are easy and simple, using the power of tech to verify a buyer’s identity in real-time without the hassle of a bunch of written forms and documents. 

At Bridgit, we offer both end-debt and no-end-debt bridging loans to suit a buyer’s needs, whether they’re upsizing or downsizing. For upsizers, they can tap into equity which allows them to buy their new property before selling their existing one with an end debt bridging loan. 

Bridgit gives buyers the opportunity to finance their next home without the time constraints of lining up the exact settlement dates. Plus, with a bridging loan, they can save money on temporary living costs and we offer no repayments until maturity and no double mortgages. In addition, we will remunerate our brokers with the same fee despite the type of loan.

Brokers: schedule a call with a Bridgit team member to find out how we can help your customers succeed with a bridging loan.

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