Bridging the gap, with bridging finance
In a nutshell, bridging finance is a short-term home loan that allows you to purchase a property before selling your existing one, making the moving process smoother, and more feasible.
Why get bridging finance?
A bridging loan is a second short term home loan which allows home owners to buy a new property before selling their existing one. This takes the stress out of trying to line up the sale of the existing house with the purchase of the next.
There are usually a few hoops to jump through to get bridging finance, but we're here to make it easy.
For those that don't quite fit in the 'bank's box' Squirrel have designed our own bridging loan.
Squirrel makes it easy so you can focus on other thingsWe know bridging finance inside out so you can spend your free time thinking about the new kitchen tiles and curtain colours while leaving the number crunching to us.
We know bridging finance inside out so you can spend your free time thinking about the new kitchen tiles and curtain colours while leaving the number crunching to us.
Expert advice
We’ve been around the block a few times, so there’s not much we haven’t seen. Tell us your situation and we'll make recommendations to suit.
More choices
We deal with more lenders than other brokers, giving you more options.
Unbiased, personal advice
They're paid the same no matter which lender you end up with, so you know you won't get pushed into a loan you don't want or can't afford.
Better mortgage rates
We’ve got negotiating power and access to better rates, so we can make sure the long-term mortgage ends up on a hot rate.
What is bridging finance, anyway?
The main reason for a bridging loan is to remove the stress of moving house. The temporary finance gives the freedom to find a new home without having to line up the sale of your current house with the new purchase. Basically it ‘bridges the gap’.
How much does a bridging loan cost?
Taking on a bridging loan is an added cost on top of the existing mortgage you’re paying, so banks will look closely to make sure you can afford both loans at the same time.
Bridging loans are set on the floating rate that’s advertised at the time which is higher than the lower fixed rates, but they can be on interest-only terms so that you don’t have to pay the principal during the bridging period. Once the existing property sells and the mortgage is repaid, the leftover balance is fixed.
The main banks tend to be the cheapest option for bridging so your mortgage adviser will approach your bank first. If they aren't prepared to bridge (which is often the case), we have our own bridging loan to consider.
There are two common types of bridging loans
1. Open bridging loans
If you're wanting to buy before selling, you'll be looking at getting an open-ended bridging loan. Buyers looking to borrow open bridging loans are seen as a greater risk to lenders, because they’re generally unable to provide a definitive date of when their property will be sold by, (therefore when they'll be able to repay the entire loan).
This means that the process of securing an open bridging loan can be more extensive and often require more equity in your property.
2. Closed bridging loans
Closed bridging finance is for home sellers that have already finalised their sale terms and lenders prefer this scenario as it has less risk. That's because there's a predetermined date that the house will be sold, which also means a date that the loan will be fully repaid.
Squirrel's own bridging product
For those that don't fit in the 'bank's box' (which can often be the case when it comes to bridging), we have our own bridging loan product. Read about it here.
Things to consider before taking on bridging finance
If you’re planning on selling your place and buying another, here are a few questions to ask yourself to make sure bridging finance makes sense for you. If you’re unsure, we’re happy to help – just give us a call on 0800 21 22 30.
Get your loan application underway
Fill in our no-obligation online form and we’ll contact you with next steps. Or give us a call on 0800 21 22 30 to speak with one of the team right away.
Keep up to date with the latest insights and tips
Check out our blog, Views from the Treehouse for the latest news and updates.
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New Zealand
A huge thank you to my advisor, Kat. She worked so hard to get a mortgage offer for me. She admitted that as I did not tick all of the boxes, she would have to present my case differently. I'm so grateful that she didn't give up on me, as other mortgage brokers had. She is so hard working, clever, lovely and friendly. I would recommend Kat to anyone looking to purchase a house.
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