Understanding Bridging Finance for Apartment Purchases
As a Clinical Nurse Specialist, your demanding schedule may not always align with the property market's timing. When you find the perfect apartment but haven't sold your existing home, bridging finance provides a solution to bridge the gap between these transactions.
Bridging loans are short-term loans designed specifically for property transitions. They allow you to purchase your new apartment while maintaining ownership of your current property until it sells. This financial tool eliminates the pressure of timing both transactions perfectly.
Should You Buy or Sell First?
The decision between buying or selling first depends on your financial situation and the local property market conditions. Many Clinical Nurse Specialists face this dilemma, particularly when:
- Perfect apartments become available unexpectedly
- Market conditions favour buyers
- Your current property may take longer to sell
- You need to secure accommodation near a new healthcare facility
Bridging finance allows you to act quickly when opportunities arise, rather than missing out due to timing constraints.
How Bridging Loans Work
Bridging loans typically operate on a loan term of 6 to 12 months to sell your existing property, or up to 12 months if your new property is being built. The structure involves:
Peak Debt: This represents the maximum borrowing amount when you own both properties. It includes your existing home loan balance plus the contract purchase price of the new home.
End Debt: This is your remaining loan balance after selling your original property and paying down the bridging facility.
Interest Capitalisation: Monthly interest payments are typically capitalised, meaning they're added to your loan balance rather than requiring monthly payments.
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Nurse Loans today.
Bridging Loan Options and Application Process
Nurse Loans can access bridging loan options from banks and lenders across Australia, ensuring you receive suitable terms for your circumstances. The application process involves:
- Initial Assessment: Review your borrowing capacity and financial situation
- Documentation: Provide bank statements and loan application materials
- Property Valuations: Assessment of both existing and intended properties
- Loan Pre-approval: Secure conditional approval before apartment purchase
Interest Rates and Loan Features
Bridging loan rates typically operate on either:
- Variable Interest Rate: Rates that fluctuate with market conditions
- Fixed Interest Rate: Locked rates for the loan term
Many lenders offer interest rate discounts for healthcare professionals, recognising the stable employment nature of Clinical Nurse Specialists. The loan interest rate is generally higher than standard home loans due to the short-term, flexible nature of the facility.
Key Considerations for Clinical Nurse Specialists
Loan to Value Ratio (LVR): Lenders typically allow higher LVRs for bridging facilities, though lenders mortgage insurance (LMI) may apply depending on your circumstances.
Offset Account: Some bridging loan options include offset account facilities, helping reduce interest costs during the transition period.
Calculating Bridging Loan Repayments: Monthly costs primarily consist of interest payments, which can be capitalised or paid monthly depending on your preference.
Stamp Duty Considerations
When purchasing an apartment using bridging finance, stamp duty becomes payable on settlement. This cost should be factored into your bridging loan amount calculations. Some states offer concessions for healthcare workers, potentially reducing this expense.
Converting to Permanent Finance
Once your original property sells, your bridging facility typically converts to either:
- Home Loan: If the apartment becomes your primary residence
- Investment Loan: If you're retaining the property for rental purposes
Both variable loan rates and fixed interest rate loan options are available for the ongoing facility.
Making Your Decision
Bridging finance suits Clinical Nurse Specialists who:
- Have identified their ideal apartment
- Possess equity in their current property
- Can service the temporary higher debt levels
- Want flexibility in timing their property transactions
The streamlined application process recognises that healthcare professionals often need to make quick decisions due to work commitments and housing requirements.
Bridging loans provide Clinical Nurse Specialists with the flexibility to secure new apartments without the constraints of perfect timing. By understanding peak debt, end debt, and interest capitalisation concepts, you can make informed decisions about your property transition.
Call one of our team or book an appointment at a time that works for you to discuss how bridging finance can support your apartment purchase goals.
