There are many different types of loans available in Australia, for business and personal use. In fact, there are so many options that it can get confusing. One such loan that you may have heard of, but don’t know much about is bridging loans.
This article is going to take a closer look at short term bridging loans to help you get a better understanding of what a bridging loan is and when they can be used.
What Exactly Is a Bridging Loan?
In order to take out a bridging loan, you will need to have a current mortgage. These loans are taken out on top of your mortgage and are a fast and easy way to access the equity in your current home. As with many forms of finance, you can often apply for bridging loans online.
Let’s now take a look at what a bridging loan can be used for.
Bridge the Gap Between Selling Your Home and Buying a New One
Selling your house can be an exciting but stressful time and you’ll need somewhere new to move into once your house has sold. A bridging loan gives you options and takes the financial pressure off you.
The most common use of a short term bridging loan in Australia is to finance that gap between the sale of your current property and the ability to purchase a new property. For instance, you might have your home on the market, or it’s been sold, and you’re waiting for it to settle. In the meantime, you want to be able to buy a new home. A short term bridging loan provides the finance to make the purchase whilst not having to wait for your current property to either sell or settle.
Preparing Your Property for Sale
A short term bridging loan is becoming an increasingly popular way to access the equity in your property before you put it on the market. In this scenario, borrowers use a short term bridging loan to do repairs or home renovations to help increase the value of your property before it’s listed for sale. This strategy is worthwhile considering if the state of the home is not quite up to scratch, or if its improvements will make it more saleable. It can also help sell the property more quickly.
You Need a Deposit for Another Home
A short term bridging loan is often used to secure a deposit on a new property – either on you’re new home or investment property.
Personal Bills Or Debts
Homeowners may have unexpected and often sizeable, personal bills that need to be paid right away. In this instance, a bridging loan can get the homeowner out of a financial tight spot. When the property sells, then the bridging loan can be repaid.
Finding a Lender for a Short Term Bridging Loan
Many Aussie lenders will have the bridging loan option. Homeowners can discuss the possibility with their current mortgage lender or shop around for a bridging loan from a different lender. When you have a few lenders in mind, thoroughly look over their websites to see exactly what they’re offering and also read their reviews. A good example of this is Mango Credit reviews.
Always call the lender to discuss your personal circumstances before making a decision.
In Conclusion
Short-term bridging loans can be used for numerous reasons, including ‘bridging the gap’ between the sale of your current property and the ability to purchase a new property, preparing your property for sale, as a deposit to purchase a new property or paying off sizable debts. We’re also spoilt for choice, with many lenders all offering short-term bridging loans for a variety of purposes
Author Bio:
Yanis Derums is the Founder and Director of Mango Credit – a leading private lender that specialises in providing bridging loans for personal use and business short term loans for commercial and/ or investment purposes. Yanis has extensive experience with financial analysis, the credit assessment, product structuring, and general business management
