I do not think I will have enough borrowing power for my construction ($500k ish), so I am thinking of having a bridging loan before I sell my other owner occupied. I was wondering if bridging loan still very popular these days? I rarely hear people about it in recent years. Are the rates much higher and any catches?
Lots of people still use bridging loans for certain circumstances However if you need funds for construction how is this going to help? Typically bridging loans are for switching one security for another, I've yet to see any lender allow construction to happen under a bridging loan arrangement. Suggest you engage a good Mortgage Broker to look at this for you.
I will sell my current owner occupied once the construction finishes and move over to the new home. All big 4 banks has this facility as per their website.
No real catch subject to having sufficient equity. We do dozens of them each month under our Fund. All interest capitalised and with no end debt no servicing required. Rates will depend on the term of the loan. Construction is not an issue subject to valuations. If the Big 4 advertised why have you not gone that route. Cheers Richard
If after construction has finalised then no big deal, if it was prior to construction being finished then it would be.
Bridging loans are a short term solution (for up to 12 months) and lenders generally want certainty that the property has been sold (or is about to go on the market), so the debt can return to an affordable level as soon as possible. If there are delays with your construction, you could end up in a difficult situation. I can understand the preference to avoid selling first and having to rent, but it is a much safer option.
This question might be silly, but if my land is funded through ANZ, my existing home is through CBA. Can I have a bridging construction loan through CBA and refinance the land + construction into 1 loan with CBA after construction is finished?? sounds like my construction loan has no underlying asset to secure. (a floating house) or probably my land loan, construction loan and existing owner occupied loan needs to be with the same bank to be qualified for a bridging construction loan?
Hi Folks, I have a family member in Sydney who is sitting on a PPOR valued at about $1.6m (mainly land value) with a loan of around $500k. He's been unemployed for a few years due to illness. His partner does some casual work, but income is irregular. They have one child. They want to sell their PPOR and buy a house for about ~$1.2m, closer to the kids school. A bridging loan would be ideal for them, but reading some of the posts here, its not so easy to get. How would you suggest they make this PPOR move happen?
Unfortunately, if they don't have the income to service the loan, they won't be able to get a bridging loan. How are they currently making repayments?
I think there is at least one lender that may consider it as long as there is no end debt - st george. But that would likely mean buying the replacement for about $1mil or less.
Currently they get some income from sporadic casual work, rent from an apartment they had purchsed many years ago and fully paid off. They also receive some financial assistance from extended family.
Buying a new PPOR for $1mil or less makes sense, as that's about the surplus cash they will get from the sale of their PPOR. But they would struggle to get something in that range in the area they are looking to buy. With a Bridging loan if there is an end debt after selling the original PPOR, will St George or any other bank give them a grace period of say 6 months to source the cash to pay off this bridging loan?
