Bridging finance helps you to buy a house and buys you time to sell afterwards.
On average half of all New Zealanders change their address every five years(Statistics NZ). As families grow, priorities change. School zones and that extra bedroom become more important.
- Before selling your home make sure you get your next home loan approval in writing. And ensure that you understand any deadlines and conditions.
- Organise any deposit you might require for any auctions you might attend, especially important if you are buying before selling.
There are various methods to facilitate the transition from one house to another:
Open ended bridging
This is where we organise funding which allows you to buy the new home first and then gives you time to sell the old one. This is the cleanest approval allowing you to sell and buy without too many conditions. This type of funding is a little tougher to get as the bank will factor in both loan repayments as your commitment.
Approval subject to sale
This is where we get you an approval that states you can borrow a certain amount only after you have sold your current home. This will mean that you have to sell up first and possibly get temporary accommodation while waiting to settle on another property.
To make the transition smoother you could try and sell with a late settlement date, say three months later, this may allow you time to find the new house. You could also sell with a condition which allows you to rent back the property from the new owners for the first couple of months.
These conditions can make your property less desirable, so it is a good idea to discuss the impact this may have on the sale price, with your agent. This is more likely to work in a sellers’ market.
Closed ended bridging
In the example above if you sold your home with a late settlement date, you could use this type of funding to pay for the new home before you got paid for the old home. This type of bridging finance can be a little easier to get but is only available if you have sold your home unconditionally.
Contact us today to find out what could be possible.
This article has been written by Hamish Patel, mortgage broker with mortgagesonline.co.nz. Ph: 09 625 4693, Mobile: 021 625 693, hamish@monline.co.nz
