In brief Bridging finance is a short term Home Loan. It provides a financial solution that can provide fast access to funds for property purchase and which can also be used for several different circumstances.
For example, Bridging finance is often designed to help you buy a house before you’ve sold your current one. Instead of having to rely on matching up settlement dates, a Bridging loan covers the in-between period – loaning you money while you sell your current property and buy a new one.
In this scenario this gives you more time to sell your existing property, which means that you can be fully moved into your new home before your existing property is even sold!
Bridging finance can often be much quicker to arrange than a normal mortgage and as the name suggests, it ‘bridges the gap’ between two Home Loans. However, Bridging finance should not be considered a replacement for more traditional mortgage lending, as this is normally more cost-efficient.
Whilst it’s commonly used to finance the purchase of a new property while your current property is being sold, it is also used to provide finance to build a new home while you still live in your current home.
As Bridging finance can be a complicated process and each case is written on a bespoke basis, according to the requirements of each individual client, speak to iLender for help with checking out the finer details for you and your situation.
These will include:
- how long you will need the funds
- whether the properties are for investment or primary residence
- if your current property you are selling is under contract
- whether you are building a new home or buying an existing property
- establishing the servicing ability for repayments of any existing loan and the bridging loan
Taking on Bridging finance is an added cost on top of the existing mortgage you’re paying, so Lenders look closely at your affordability.
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Types of Bridging Finance
There is either a ‘Closed Bridging Finance’, or an ‘Open Bridging Finance’ option.
‘Closed Bridging Finance’ is when the sale on both properties – the new home and current home – are unconditional and all that is needed is to ‘bridge the gap’ between the two settlement dates.
‘Open Bridging Finance’ is when you want to buy another property, without having sold your present property.
Do you need Bridging finance?
The main benefit of Bridging finance is to help with reducing stress during the house buying and selling process. The short term finance gives you the freedom to find a new home without having to worry about selling your existing property first.
It also means you don’t need to worry about matching up settlement dates, which can reduce any pressure on you to sell quickly.
At iLender we can guide you through every step of the Bridging finance process, from finding a suitable Lender for your needs, to managing your application through to completion.
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So, whatever your needs or circumstances, give us a call!