Bridging Finance is required when there is a period of time that you have loans on two properties – one you have just purchased and one you are trying to sell. Whilst interest rates are usually at the standard variable rate, it can be very costly in other ways.
There are two ways that a bridging loan can be structured:
- Pay the debt (usually interest only) on both properties at the same time.This may not be feasible and can be a very stressful time trying to satisfy the debt of two properties.
- You do not make any repayments during the bridging period but…the interest on the mortgages of both properties (peak debt) is added to the loan amount (interest capitalisation). This will increase the end debt of your mortgage once you have sold your existing property.
Your Sage Loan Services consultant will assess your situation to see if bridging finance is an available option for you.
The best way to relocate
If you’re relocating, ideally you would have sold your home first. Try arranging a longer settlement term on your current property so you have enough time to find a property that fits your criteria. By doing this you will know what funds you have available for your relocation.
Other options
If a longer settlement term is not available, Bridging Finance may be an option. Your Sage Loan Services consultant will discuss if you fit the strict criteria that Bridging Finance requires.
If Bridging Finance is not an option, negotiating an extended settlement before you exchange on the property that you would like to purchase will give you time to sell your existing home or arrange for settlement to occur simultaneously.
Renting could be an option
If you have sold your property and have not found another one to move into, you may need to rent – this can only be a short-term strategy to ensure you find a property that is perfect for you.
Sage Loan Services consultants can prepare this transition so you can have a stress-free move.
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