Moving to Your Next Home

A straightforward approach for those moving homes would be to ensure the sale of your existing home happens contemporaneously with the purchase of your new home. In this scenario, your existing home loan will be paid off and the new home loan will be actioned on the same day. The proceeds from the sale of your home will be used to as deposit for the new home. Essentially, the settlement of your existing home and the new home happens on the same date. This is the best and simplest process to moving to your next home.

But not everyone gets the luxury of settling both homes on the same day. This is where bridging finance comes to your rescue.

Bridging finance is a product that helps you purchase your next home before you have sold your existing home. The product will provide you with the loan to buy your new home before you receive the sale proceeds from the sale of your home. There are two types: closed bridging finance and open bridging finance.

Closed bridging finance is where both your new home and current home have gone unconditional and the product is "bridging" the gap between the two settlement dates, i.e. the new home is settling on the 1st of May and your current home is settling on the 20th of May. The product will be active from the 1st of May until the 20th of May when your existing home is sold.

Open bridging finance is where your new home has gone unconditional but your existing home is yet to be sold. Depending on your financial circumstances the chosen lender confirm a structure and period of time until which your home should be sold.

Bridging finance is a great product when used properly. This product does incur higher interest due to the risky nature of the situation. As such, it is important to understand the limitations of the product. We will advise you on the pros and cons of the product with regards to your unique situation and recommend the best course of action to achieve your goal.