Want to knock down and build multiple dwellings?

As the population in our major cities continues to grow and with the centralisation of the workforce there is an increasing trend toward greater density of population and smaller households. What does this mean? It means where there used to be warehouses there are now blocks of apartments and where there used to be a single family home, now there are quite often two or more dwellings on the site.

If you are thinking of knocking down an old house and re-building multiple dwellings, there are a number of considerations that should be taken into account.

 

Where do I start?

It is important to get a few good people in your corner.

  • A property surveyor or town planning consultant should be able to guide you through the initial stages and help you navigate approvals and town planning
  • A good Mortgage Broker will be able to provide guidance on the best options to finance your project.
  • A reputable builder who has experience with this type of construction will help you avoid some pitfalls.
  • A Real Estate Agent with expertise in the local market will know what price your property can achieve

There will no doubt be some challenges (there nearly always is!) but it can be a worthwhile and profitable exercise if undertaken properly.

 

Size does matter

The size and dimension of a block will be a major determinant on what type of multi dwelling structure (if any) can be built on the block. Setbacks (how far back from the street a dwelling must be) as well as Easements (property clear ways) and Covenants (restrictions on use) must all be well understood. Council Planners will have guidelines on exactly what can and cannot be done on a particular block.

The location of driveways, height restrictions and limits on size per dwelling will all have a major impact on the viability of the project.

 

Do the economics stack up?

Some back of the envelope number crunching will be able to tell you whether or not what you are looking at is viable. Know your costs and build in a buffer. Do your research into what Townhouses and Units are selling for and it is essential to know what your land is worth.  A Real Estate Agent will be able to help you estimate the selling price for the property once it is built or you can engage the services of a Property Valuation service.  Winston Lo from Hot Spot Property agrees “There can be a great deal of value created with the right kind of build and the right location, but it can be a costly mistake if you don’t get it right.”

 

Quality considerations

Depending on whether you want to live in or sell a particular dwelling will influence the decisions you make in relation to the property fit out. If you have a passion for pink, then by all means fit out your pad in the shades that you desire, however if you are selling, then maybe neutral tones are a bit wiser.  Same theory applies for your choice of fittings, blinds, flooring and the like – generally steer away from the more divisive styles and stick with more popular ones, even if they aren’t necessarily to your own taste!

 

Standard build or custom designer?

Your budget and quality considerations will influence whether or not you engage an architect to plan and design the property of your dreams or select from designs that are already in existence. Builders such as Metricon and Porter Davis have options for builders which offer standardized designs and supporting service, however with minimal modifications at a relatively low cost compared to alternatives that are custom designed.  If you are targeting a higher end sale, then a more custom designed property with all the bells and whistles may be more what you’re after.

 

Is the Taxman going to be interested in this?

If you have previously lived in the property before knocking it down, part of your project may be exempt from Capital Gains Tax.  Narelle Pasavento from Prosper Advisory advises clients on these matters “There are a range of income tax, capital gains tax and GST issues that need to be considered when thinking about building/developing. In many circumstances some profits can be subject to income tax.   It is important to speak to an Accountant early as everyone’s circumstances are different.”

 

Getting approvals

Every council will have rules and regulations around what can and can’t be done with your knockdown and multiple dwelling. This includes building permits, demolition permits, dual occupancy permits and sub-division permits.  A building surveyor or planning consultant will be able to guide you through the process, or your builder if you have engaged one will be able to assist.

 

Will I be able to get Finance?

Unless you are in the fortunate position of not needing it, you will need to go through the process of obtaining finance for your build. Some lenders specialize in lending for these kinds of projects and your Mortgage Broker will be able to help you find the best lender and the best rate for your project.  The valuation for the project is key to determining the funding available and will depend on the value of the land, the cost of the build and the quality of the fittings used.

 

 

Interested in a knock down and build?

If you want to talk through options you can get in touch for a free, no obligation chat.  

You can contact Doug at (e) douglas.piening@choicehomeloans.com.au or (m)  0408 671 524.

 

Douglas Piening is a Mortgage and Finance Broker with Choice Home Loans and is passionate about providing clients with lending advice they can trust. Whether it’s re-financing an existing property, buying a new or next home, or investing, he brings a wealth of knowledge and expertise to assisting clients with their lending needs. 

Want to hear what clients have said about working with Doug? Take a look at these reviews from LinkedIn and Facebook.

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

How much can you afford to borrow with your first home loan?

Understanding how much borrowing capacity you have when buying your first home is an essential step for all newcomers to home ownership.

The question of “How much can I borrow?” rears its ugly head for all new home buyers. As daunting as it can be, understanding your borrowing power is important – and essential – for those ready to get their foot in the door with their first home purchase.

Financial factors

Before you start looking for a property – either to live in or as an investment – take a look at your finances from all angles and ask yourself a few important questions:

  •          Do I have enough money to pay for a deposit?
  •          Can I afford to make monthly repayments?
  •          Is my repayment/credit history positive?
  •          Have I assessed my household budget?
  •          Am I planning to start a family soon?

Understanding where you stand financially and what financial loads may be coming your way in the near future can give you a clearer picture of how large or small your borrowing capacity should realistically be.

Figures that figure

How much you can comfortably afford to borrow comes down to two factors:

  • The size of your deposit. Most lenders require a minimum of 10 per cent of the total property cost.
  • How much you can afford in mortgage repayments.

If you’re currently renting a property, your weekly or monthly rental amount is a good indication of the starting figure for your mortgage repayments. This is the bare minimum, however. You will need to add other expenditures to this figure, such as rates, taxes, lenders mortgage insurance (if applicable), among others.

New buyers may also want to consider single or joint income amounts. As a general rule, your mortgage repayments (along with other short and long-term expenses) shouldn’t cost more than 35 per cent of your gross income.

Help wanted!

Many people choose the help of a mortgage broker when shopping around for their first home loan, and for good reason. Using a mortgage broker to seal the deal can give you greater choice, peace of mind and clarity, especially for those just starting out in the property market.

Mortgage brokers have a wealth of knowledge to steer you in the right direction in terms of what you can realistically afford versus what you think you can afford.

There are many home loan calculators that can also help buyers get a sense of their borrowing capacity. These online calculators factor in your loan type, loan length and interest rates to calculate a general repayment figure. Your broker will be able to walk you through these calculations to ensure you’re aiming for the right figures. 

Doing your due diligence from the very start will pay big dividends when it comes to home ownership. Putting your expenses under the microscope may be intimidating at first, but it will ensure your home loan works as hard for you as you did for it.

 

If you are looking at buying a first home, be sure to get in touch to talk through your options.

You can contact Doug at (e) douglas.piening@choicehomeloans.com.au or (m)  0408 671 524.

Douglas Piening is a Mortgage and Finance Broker with Choice Home Loans and is passionate about providing clients with lending advice they can trust. Whether it’s re-financing an existing property, buying a new or next home, or investing, he brings a wealth of knowledge and expertise to assisting clients with their lending needs. 

 

Want to hear what clients have said about working with Doug? Take a look at these reviews from LinkedIn and Facebook.

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

 

5 reasons why pre-approval makes things a whole lot easier

Whilst it is not a mandatory requirement for home buyers to seek a pre approval, doing so can make things considerably easier.

So why might that be?

 

1) You get a clear and accurate price range

Whilst you can use a borrowing calculator to work out your approximate buying power, different lenders have different requirements and getting pre approval gives you a far more accurate price range.

 

2) It reduces the financial risks associated with finance ‘falling through’

Home buyers who aren’t able to secure finance by the date of settlement are at risk losing their deposit. Not only is it devastating to not only be going ahead with the purchase, but vendors are within their rights to keep the deposit paid as there is a breach of contract.

 

3) Greater leverage in negotiations

You can also use your pre approval as extra leverage when negotiating with vendors as you are less likely to have to pull out of the contract last minute because you can’t get finance. You will also have a clear ceiling price to work with in negotiations and are less likely to be pushed into paying over your budget.

 

4) It gives you time to look around

Most pre approvals last between three to six months, so you have plenty of time after you’ve received the pre approval to look around for your new home.

 

 5) A faster final approval process

Getting pre-approved means you’re likely to have a faster final approval process too, so you won’t be waiting around to hear from the bank before you can settle your contract and move into your new home.

 

So whilst it isn’t mandatory, we would recommend getting pre approval in writing before beginning the search for your next house as an absolute must. And definitely before any negotiation that might involve signing a contract or paying a deposit.

If you need any more information on pre-approval, feel free to get in touch.

 

 

 

For specialist lending advice, you can contact Doug at (e) douglas.piening@choicehomeloans.com.au or (m)  0408 671 524.

Douglas Piening is a Mortgage and Finance Broker with Choice Home Loans and is passionate about providing clients with lending advice they can trust. Whether it’s re-financing an existing property, buying a new or next home, or investing, he brings a wealth of knowledge and expertise to assisting clients with their lending needs. 

Want to hear what clients have said about working with Doug? Take a look at these reviews from LinkedIn and Facebook.

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

Navigating your way to your first home loan

Although applying for your first home loan may be the biggest financial decision you’ll make, it doesn’t need to be an overwhelming one. With the right preparation, a realistic understanding of your financial position and some professional guidance, you can position yourself as an attractive first home loan customer and gain approval in no time.

So what should you do?

1) Clean up your credit

Before applying for your first home loan, make sure you are creditworthy in the eyes of a lender by obtaining a copy of your personal credit file (you can get a free copy of your credit report at the veda website). Your credit history will be a key factor that a lender will consider when deciding to process your loan application. If you have a history of credit defaults, be prepared to explain honestly and up-front to the lender why those defaults occurred, how you remedied the situation and how you’ve taken steps to ensure the situation will not repeat itself.

2) Check your financial position

It’s also important to conduct a self-assessment of your financial position. This is to work out the amount you can borrow and the ease with which you’ll be able to manage your repayments. Try creating a spreadsheet of your income, expenses, assets and liabilities. Make sure you are honest with yourself about your everyday living expenses and commitments. Your home loan repayments should equate to no more than a third of your income, give or take your expenses. Then consider the extra costs of buying a home (on top of the purchase price) such as legal fees, lender establishment fees, stamp duty (if no government concession applies) and so on. You may also want to look into the availability of any available government concessions or grants that may help reduce the overall cost. A mortgage broker can help you assess your financial position to ensure the amount you wish to borrow is feasible in your circumstances.

3) Be deposit-ready

Although it’s true that some lenders don’t require a deposit – or require only a minimum deposit – you may want to aim to have a solid 20 per cent deposit saved up. Also factor in the additional costs of buying a home such as conveyancing, stamp duty and removalists. Saving a deposit is a good idea for two reasons:
– A 20 per cent deposit could mean you do not have to pay for Lenders Mortgage Insurance (LMI). LMI is a premium amount that a borrower must pay to the lender when the loan-to-valuation ratio exceeds 80 per cent. Some lenders may make the loan available without having to get this insurance.
– A 20 per cent deposit immediately tells a lender that you are financially disciplined and responsible – attributes that will encourage lenders to look favourably upon your first home loan application.
If you do not have a 20 per cent deposit, don’t despair. Your mortgage broker will provide you with some options to help you find the right loan product. If you need any tips on saving a deposit, check out raising a deposit.

4) Do your research

Finding the right first home loan often entails so much more than just interest rates. You should try to research a range of products and investigate their fine print, including any set-up and break fees, loan structures, flexibility options such as redraw and offsetting, repayment options and guarantees. A good mortgage broker will have expert product knowledge that they can discuss with you to determine what loan would best suit your lifestyle and needs, both now and in the future (for example, when starting a family).

5) Gather your documents

To facilitate a fast assessment of your loan application, it’s helpful to gather recent copies of your pay slips and evidence of any other income. Also, gather copies of your bank account statements and credit card statements. If you’ve been employed for only a short time, try strengthening your application by obtaining letters of reference from your current and previous employers. If you are self-employed, a way to show your monthly income, outgoings and cashflow is by having business invoices and receipts on hand in case the lender requires such evidence of your earnings.

 

It can be easy to get overwhelmed when looking for your first home. Getting in touch as soon as you can with a good mortgage broker who can help position you as an attractive borrower to lenders, can help make things much easier.

 

For specialist lending advice, you can contact Doug at (e) douglas.piening@choicehomeloans.com.au or (m)  0408 671 524.

 

Douglas Piening is a Mortgage and Finance Broker with Choice Home Loans and is passionate about providing clients with lending advice they can trust. Whether it’s re-financing an existing property, buying a new or next home, or investing, he brings a wealth of knowledge and expertise to assisting clients with their lending needs. 

Want to hear what clients have said about working with Doug? Take a look at these reviews from LinkedIn and Facebook.

 

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

Why would you use a Mortgage Broker?

Research has revealed that 53% of Australian’s now use a mortgage broker for their lending needs, up from 35% ten years ago. So why are Australian’s increasingly using the services of a broker?

 

1) A choice of lenders

With an extensive panel of lenders (including the major banks), mortgage brokers are able to compare hundreds of loans to find a loan that gives you the best fit for what you need. If you go direct to a bank, they will only show you their lending products. Better choice across the whole market = a better loan and interest rate tailored to your needs. Here is the panel of lenders that we have at Choice Home Loans.

 

2) To save time

With today’s increasingly busy lifestyles you probably don’t have hours to devote to ‘shopping around’ to find the best loan and to go back and forth to a bank. Mortgage brokers are customer service focussed and most will come to you at a time and place that suits you – whether that is at home or work, during or after hours.

 

3) It’s free and could save you money

There is no cost to you for the services of a broker. Brokers get paid commission on loans from lenders, but regardless of whether you go direct to the bank or through a broker, the interest rate and fees to you will be the same. Very often, given brokers knowledge of the lending market and the access they have to special lending deals – using a broker can get you a better interest rate than going direct. Last year our clients who refinanced saved on average $3,800 a year in interest, a huge saving from finding a better rate in the market.

 

4) They are finance experts 

Mortgage brokers are experts in financing options, with an in depth understanding of the overwhelming array of loan options available. Many loans seem to offer a great deal, but they could have penalties, fees and charges you may not be aware of, or they may not offer the flexibility you require in the future. Mortgage brokers ensure that you find the best loan for your specific requirements, now and into the future.

 

5) They are with you for the loan and beyond 

Unlike constantly changing bank staff, Mortgage Brokers are often with you for the life of your loan and beyond. Mortgage Brokers usually own their own businesses and are committed to their clients for the long term, keeping in touch to make sure your loans are still right for you and that circumstances haven’t changed. How often does the bank call to tell you that interest rates have changed and you can get a better deal? Probably not often! But don’t be surprised if this is something your broker does.

 

There are significant advantages to using a mortgage broker. Whether you have an existing loan which needs a health check to see if it’s still the right fit and the best interest rate, or you are in the market for a first or next home, or it’s time to stretch yourself and get an investment loan – it’s a great idea to get in touch with your mortgage broker.

 

Douglas Piening is a Mortgage and Finance Broker with Choice Home Loans and is passionate about providing clients with lending advice they can trust. Whether it’s re-financing an existing property, buying a new or next home, or investing, he brings a wealth of knowledge and expertise to assisting clients with their lending needs. 

For specialist lending advice, you can contact Doug at (e) douglas.piening@choicehomeloans.com.au or (m)  0408 671 524.

Want to hear what clients have said about working with Doug? Take a look at these reviews from LinkedIn and Facebook.

 

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

 

Finding a home loan when you’re self-employed

There are many perks to working for yourself, but when it comes to applying for a loan, it seems being your own boss sends up a red flag to banks and other lenders.

Andrew, owner of Tick Concepts, was one such person who found himself in a difficult position, after having left corporate life and a steady stream of high paying PAYG roles to go into business, when he went to sell the apartment he had owned in Sydney and buy a house in Adelaide. Despite the fact he was putting down a huge 50% of the equity in the new property and was doing well in his new business venture – he came up against several brick walls when looking for finance and a “sorry we can’t help”.

So why is it so difficult securing financing when you are self employed? For lenders a salaried employee has a regular, steady income and is less likely to experience the cash flow volatility of a small business owner, contractor, entrepreneur, tradesperson or freelancer.

Yet by being proactive and accessing specialist advice, self-employed applicants can also enjoy a successful and hassle-free road to securing a home loan. For Andrew this meant getting advice on an option with a Credit Union, who would take 1 year of financials rather than 3 and would accept BAS statements, making it easy for him to secure the loan for his new property.

So if you are self employed, try these 5 top tips when it comes to securing a loan.

1. Seek expert advice

Trying to navigate the home loan landscape solo may not produce the outcome you desire. There are many experts who can help self-employed people access a home loan, and a mortgage broker is a good first port of call. They will be able to provide you with an up-to-date overview of which lenders on their panel are most comfortable lending to the self-employed, and also explain what sorts of loan products are available. They can also provide valuable advice around the sort of documentation you will need to have ready before you submit your application.

2. Get your affairs in order

Many lenders will lend to self-employed borrowers who provide their full business financials. This generally includes your personal and business tax returns for the past two years. If you have these documents on hand – and they reveal a fairly consistent income – applying for a loan should be relatively straightforward.

However, the hectic schedule that comes with running your own business means many self-employed borrowers’ tax returns are not up to date. If you have time on your side, consider working with your accountant to lodge your outstanding returns. If you’re in a hurry, you may wish to explore the option of applying for a low doc loan.

3. Consider a low doc loan

Low doc loans are offered by a wide range of lenders and, as the name suggests, require less documentation than traditional loans. Many low doc loans only require 12 months of business activity statements instead of full financials, for example. A downside of some low doc loans is that they may only be available at a lower loan to property value ratio (LVR), which means you may need a larger deposit.

4. Do your homework

Checking your credit history is a good step for anyone applying for a home loan. If you’re self-employed, it’s definitely worth taking the time to make sure your credit history doesn’t include any defaults or errors – these can hold up your loan application if they are not rectified in advance.

Taking the time to work out exactly how much you’d like to borrow is also a good idea. That way, you can hit the ground running when you meet with lenders or your mortgage broker.

5. Think outside the square

It may be possible to apply for a home loan using a Certificate of Income Declaration – a document that verifies your income and is signed by your accountant. It’s wise to consult a mortgage broker before applying for a loan in this way, as they can advise which lenders will accept an income declaration. It should be noted, however, that applying for a loan using such a document may mean that the required LVR (the portion of the property value you can borrow) may be lower, so you may need a larger deposit.

So while it’s a little more complicated for self-employed borrowers, getting a home loan can be easier than you’d imagined with a good mortgage broker in your corner.

 

Self employed and looking for a home loan or refinancing? To get some specialist help and advice, you can contact Doug on (m)  0408 671 524 or (e) douglas.piening@choicehomeloans.com.au.

 

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

How Much Can I Borrow?

This is often the first question that a client will ask before they even think about buying a new property, and many are surprised at the answer they get. Different lenders have different policies with regard to the maximum borrowing they will offer but there are some basic principles that remain constant throughout.

Borrowing capacity is determined by several factors:

  1. Eligible Income

Eligible income may include income from primary work, income from investments, income from Government benefits or a combination of the above. In some cases, Lenders will require that employment has been for a certain period of time, and they may not accept some types of income. Your Broker will navigate the maze of what is ‘eligible income’ for you.

  1. Living Expenses

Living expenses are generally calculated as the higher of your declared living expenses or a minimum benchmark set by the Lenders. The Henderson Poverty Index is one measure which has been used as a benchmark minimum. As a guide for a single person, the applied living expense ranges from just over $1,000 per month up to over $1,700 per month. Couples range from around $1,800 per month up to around $2,700 and each dependent can be from around $153 up to over $500 per month. This variation goes a long way to explaining why some borrowers may be eligible with one lender but not another.

  1. Other Commitments

Existing credit commitments will reduce the amount that someone is able to borrow. For example, if you have a car loan, personal loan or another property loan, the repayments on these will reduce the amount of additional finance available. If you have Credit Cards, the total limit (regardless of whether you pay them off in full) will impact the amount that you can borrow. As a guide the monthly commitment for a credit card is equal to around 3% of the total limit – for example if you have Credit Cards with a limit of $20,000 this equates to a commitment of $600 per month (3% x $20,000)

Once income, living expenses and other commitments are ascertained the borrower will hopefully have an amount of surplus money available each month – this amount is then used to calculate the maximum repayment possible and by extension the maximum loan amount.

The lender will apply a rate of interest that is higher than the current rates available – this provides a safety net or buffer in the event of rising interest rates. For example, whilst most Standard Variable Rates are around 5% at present, the Assessment Rates (or implied rates for this purpose) are between 7% and 8% in most cases.

Lender calculators can be useful, but should only used as an approximate guide. Your specific circumstances and the lenders policies will determine exactly how much you can borrow.

If it all sounds a bit complex, don’t worry your Mortgage Broker will help!

 

Need any information on Home Loan Options?

telephone  Contact Doug on (m) 0408 671 524 or (e) douglas.piening@choicehomeloans.com.au

 

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.

 

 

 

What you need to know if you ‘buy before you sell’

It happens all the time. You finally find that great next home you have been desperately looking for and you want to make an offer, like now, before you have sold your existing home. You can just picture yourself relaxing out on that back deck with a wine or two – it’s going to be great!

But what if you don’t settle on your existing property before the new place does and you need lender finance to tide you over? Enter the need for a Bridging Finance.

 

What exactly is a Bridging Loan?

Many people don’t understand what bridging loans are until it is too late. It’s best to understand what they are before you ‘buy before you sell’.

As the name implies a Bridging Loan provides a bridge between two loans, whereby for a period of time there will effectively be two loans to cover the purchase of a new property before settlement on the old property has occurred. The lender takes security over both properties and lends against them until the sale and purchase process on both has been completed.

 

How do they work?

There are a few (scary sounding!) terms when it comes to Bridging loans.

 

Peak Debt – this is the anticipated highest debt amount which includes your existing mortgage, new purchase costs and anticipated interest costs that accrue over the life of the Bridging.

End Debt – this is the anticipated debt level following the sale and settlement of the original property. This in effect is your new mortgage amount.

Capitalised Interest – interest is accrued and added to the loan balance during the period of Bridging

 

Example: May-Ann & Ben have purchased a property for $1.3m (including purchase costs). They still have $400,000 owing on their current property which they estimate will sell for $1m. In this case their “peak debt” begins at $1.7m.

 

Bridging loans are interest-only, so during the bridging period of say, six months, interest will be compounded monthly on your ongoing balance at the standard variable rate. The interest bill will then be added to the ongoing balance when you sell your house, and this amount becomes the mortgage on the new property.

 

May-Ann & Ben’s lender has a standard variable rate of 5.0% so over a period of 6 months their will incur interest of $42,500. As they are not paying any principal at this stage, this interest will be “capitalised” and added to their “peak debt” so it rises to $1.742m.

 

While the interest rates on bridging loans are now comparable with ordinary mortgages, don’t forget that you are still essentially carrying two mortgages, and during the bridging period you are not paying anything off. The longer you take to sell your existing home, the higher your interest bill, and hence your new mortgage, will be.

 

May-Ann & Ben sell their house and achieve a sale price of $970,000 (after agent costs). The loan is then reduced by that amount to $772,500 which becomes the “End Debt”.

 

Some lenders require a client to be able to service the loan at Peak Debt, meaning they have to have a lot of surplus funds every month, whilst others allow servicing on End Debt alone.

So what are the Pros and Cons of Buying before you sell and Bridging Finance?

It’s best to chat to your Mortgage Broker to weigh up the pros and cons for your particular circumstance, but generally speaking;

 

The Pros

  • You get to secure the next roof over your head (and that awesome deck!) before you sell the old one
  • It reduces the rush and stress of trying to match up two settlement dates exactly, or leaving you with no-where to live for an unknown period
  • With finance secured you may feel like you are in a better bargaining position when selling your existing home
  • Bridging Loans are now comparable to standard variable rates
  • With interest only Bridging Loans, you aren’t required to pay the interest at the time, it is added to your loan amount at the end of the bridging period.

 

The Cons

  • There is a pretty hefty cost involved during a Bridging Loan Period
  • For every $100,000 in additional costs you take on, you are paying an additional $416 a month on top of your existing loan. So if you buy a $1m house, that’s an additional $4,160 a month, every month while the Bridging Loan is in place
  • There are likely to be loan establishment costs
  • Different lenders have different requirements for Bridging Loans, many lenders will require you to be able to afford to pay the ‘peak debt’ amount, something that is out of reach for most people.
  • It’s fair to say lenders don’t like doing Bridging Loans as it is a lot of work for a short period of time, so they don’t always make it easy! Once again your broker can help you work out which lender options will work for you if you are Bridging.

 

And finally a small cautionary tale. Lenders also have minimum time frames for Bridging Loans. A recent client of mine had a 3 day period between the purchase of their new home and the sale of their existing one. There is no lender that will be able to execute a change of title and settlement of loan within that time period. Most banks will insist on a minimum 2 week Bridging Loan period.

 

So to Bridge or not to Bridge?

In most cases you are better off looking to sell and settle on an existing property before purchasing a new one, or line the settlements up to be on the exact same day. But real life (and buying property!) can get in the way of this. So if you are thinking about buying before you sell, or you have bought before you have sold get in touch to chat through your Bridging Loan options.

 

 

Thinking of buying before you sell?

telephone Call Douglas today on 0408 671 524

 

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.