A bridging loan is a short term loan that finances the purchase and/or construction of your new property while you're selling your existing property.
How does a briding loan work?
- Lender usually takes over mortgage of existing property as well as financing the new purchase/construction of the new property.
- This total is called Peak Debt (includes balance of existing loan and new funds sought).
- Repayments are generally interest only.
- Once you sell the first property, the net proceeds of sale (after costs) are used to reduce peak Debt. The remaining debt plus any capitalised interest becomes the End Debt
- This End Debt then paid as per a regular mortgage product
Some lenders may allow you to capitalise interest on the briding loan meaning your loan balances increase as interest is added to your loan.
Not every lender treat bridging loans the same way and options will vary accordingly - so contact Mortgage Choice today.
With 25 lenders on our panel, it's like to talking to 25 bank managers at the one time.
So now is a perfect time to contact us and see how we can help you.
To find out more - contact us at Suite 2, 10-12 High St Wodonga or call 02 6056 4433.