What is Bridging Finance?
Bridging Finance provides a short-term loan solution that allows you to purchase a new property before selling your existing home. For law enforcement officers looking to secure auction properties quickly, this financial tool can bridge the gap between buying and selling, eliminating the pressure of timing both transactions perfectly.
Auction properties often require unconditional contracts with settlement periods as short as 30 days. Traditional home loan approvals rarely accommodate such tight timeframes, making bridging finance an invaluable option for purchasing auction properties.
How Bridging Loans Work for Property Auctions
When applying for a Bridging Loan, lenders assess your borrowing capacity based on your ability to service both your existing mortgage and the new loan simultaneously. The loan structure typically involves:
- Peak Debt: The maximum loan amount when you hold both properties, calculated using the contract purchase price of the new home plus your existing mortgage balance
- End Debt: The remaining loan amount after selling your existing property
- Interest Capitalisation: Monthly interest payments are often capitalised and added to the loan balance, reducing immediate cash flow pressure
The loan term usually spans 6 to 12 months to sell your existing property, or up to 12 months if your new property is being built. This timeframe provides adequate opportunity to market and sell your current home without rushing into an unfavourable sale.
Access Bridging Loan Options from Banks and Lenders
Blue Loans can access Bridging Loan options from banks and lenders across Australia, ensuring you receive suitable terms for your financial situation. Different lenders offer varying:
- Variable interest rate and fixed interest rate options
- Loan to value ratio (LVR) requirements
- Lenders mortgage insurance (LMI) policies
- Interest rate discounts for law enforcement professionals
Some lenders provide no LMI loans for police officers, which can significantly reduce the overall Bridging Loan amount required.
Ready to get started?
Book a chat with a Finance and Mortgage Broker at Blue Loans today.
Should You Buy or Sell First?
This common dilemma affects many law enforcement officers in the property market. Bridging finance eliminates this decision by allowing you to:
- Secure your ideal property: Purchase without being contingent on selling your existing home
- Avoid temporary accommodation: Move directly from your current home to your new one
- Reduce auction competition stress: Bid confidently knowing your finance is arranged
- Time your sale strategically: Sell when local property market conditions favour sellers
For those considering buying your next home, bridging loans provide flexibility that conventional financing cannot match.
Calculating Bridging Loan Repayments
Calculating Bridging loan repayments involves understanding the loan interest rate structure. Most bridging loans operate on variable loan rates, though some lenders offer fixed interest rate loan options for the bridge period.
Typical monthly costs include:
- Interest on your existing mortgage
- Interest on the bridging loan amount
- Ongoing property expenses for both homes
- Stamp duty on the new property purchase
Many lenders offer offset account facilities, allowing your savings to reduce the interest charged on the bridging loan. This feature can substantially lower the cost of maintaining dual properties.
The Application Process
Obtaining loan pre-approval for bridging finance involves a streamlined application process designed for time-sensitive auction purchases. Required documentation typically includes:
- Recent bank statements
- Employment verification
- Current mortgage details
- Contract of sale for the new property
- Valuation of your existing property
Blue Loans specialises in bridging loans for police officers and understands the unique employment structures within law enforcement. This expertise ensures your loan application addresses lender requirements efficiently.
Getting Pre-Approved for Auction Success
To get pre-approved before attending auctions, start the application process early. Pre-approval provides:
- Confidence in your bidding capacity
- Clear understanding of your borrowing limits
- Faster settlement following successful auction purchases
- Reduced stress during the auction process
Our team can help assess your borrowing capacity and guide you through obtaining pre-approval for bridging finance.
Interest Rate Considerations
Bridging Loan Rates typically sit above standard home loan rates due to their short-term nature and higher risk profile. However, law enforcement officers often qualify for interest rate discounts through:
- Professional package discounts
- Existing customer relationships
- Strong employment stability
For more information about getting a lower interest rate on your bridging loan, our experienced brokers can negotiate competitive terms across multiple lenders.
Bridging finance offers law enforcement professionals the financial flexibility to secure auction properties quickly while maintaining control over the sale timing of their existing homes. With proper planning and professional guidance, bridging loans can facilitate smooth property transitions without the stress of coordinated settlements.
Call one of our team or book an appointment at a time that works for you to discuss your bridging finance options and auction property purchase strategy.
