Browse Forums Home Finance 1 Apr 19, 2010 10:04 am Our house is set to go on the market the weekend of an auction of a house I love. I am trying to negotiate a 90 settlement if we are successful at the auction. It is believed our home should not take long to sell in the current Melbourne market so I may not need bridging finance. However..... in the case of the person buying our home needing 90 days or just taking that little longer to sell I am wondering what experience people have with bridging loans. Are they hard to get? I imagine we would need it at most for 1 or 2 months. I would never go down this path if I did not adore this home and it is quite unusual so sitting out the auction is not really an option. I imagine with the current mortgage and the new one our total debt would be $820-$830k (feel sick at the thought) Before I go to the bank I just wanted to see some peoples experiences. If they can see your home is on the market or even sold will they allow you to have the bridging finance? We have some savings that can cover the loan for several months if need be. Thank you Re: Bridging loans - help!!!! 2Apr 19, 2010 2:12 pm Hi Penny, Depending on which bank you go to depends on how they work their bridging finance. Most lenders length of time is 6 months, there are some that go to 12 but either way you should be fine in this respect. Some banks require you to service the full debt, some the full debt at interest only rates and some that only require you to service the end debt. When it comes to bridging finance, it very much depends on your personal circumstances to which one suits yourself, so if your normal bank doesn't fit your current circumstance make sure you shop around. Also, because you are buying at an auction, you will need your finances sorted beforehand so you have access to the required deposit etc, either through a cheque or deposit bond. Re: Bridging loans - help!!!! 3Apr 20, 2010 5:28 pm As a general rule bridging loans work well when the total debt (known as the peak debt) adds up to be less than 70% to 80% of the value of both properties. The final debt once your house is sold (known as the end debt) must also be below 80%. There are ways to borrow up to 90% with the peak and end debt however LMI would be VERY expensive as it would be charged on the peak debt. Overall bridging loans are not too expensive if just held for a month or two. The killer is if your house doesn't sell and you end up paying interest for 6 months +! For that reason we only recommend it to our customers if they have plenty of equity and are selling in a hot real estate market. Banks are very conservative when assessing bridging loans. Although their guidelines vary below are some general guidelines: * You must be able to afford to pay interest only repayments on the peak debt (not all lenders required this). * You must always be able to afford the end debt (that makes sense doesn't it?). * When lenders do their calculations they will assume that you sell your current property for less than market value. This is known as a buffer or a fire sale valuation. * Both properties must be in good condition, in a high demand location and the valuers report must state that the property can be sold quickly. * You must have significant equity in your current property so that the peak debt is less than 80% of the total value of both properties. Being in Melbourne you are likely in a good market to consider a bridging loan. It will only work for you if you have plenty of equity. Good luck! Hi there, long-time lurker but first time posting. I've bought a house 2 and a bit years ago and last year we had some major water damage on a converted pergola area… 0 7936 Yes, unless you are in a low intensity rainfall area or the area is protected from rain. Do you have access to NCC Part 2 or can you download it? I can email you a copy… 10 12533 Thankyou so much 😀 I've decided on White on white for doors and trims, White on white 50% on ceiling and Mt buller for walls. Fingers crossed it will look OK 😀 2 7171 |