Understanding Bridging Finance for Property Purchases
As a nurse practitioner looking to upgrade your living situation, you may find yourself facing a common dilemma: should you buy or sell first? The local property market often moves quickly, and waiting to sell your existing property before purchasing can mean missing out on your ideal apartment. This is where bridging finance becomes an invaluable tool to bridge the gap between buying and selling.
Bridging loans are short-term loans designed specifically for this situation. They allow you to purchase a new property while still owning your current home, giving you the flexibility to secure your next apartment without the pressure of timing both transactions perfectly.
How Bridging Loans Work for Apartment Purchases
When buying a home with bridging finance, you'll essentially have two loans running simultaneously. The bridging loan covers the contract purchase price of the new home, while your existing home loan remains in place. This arrangement creates what's known as "Peak Debt" – the highest point of your borrowing during the bridging period.
The loan term usually ranges from 6 to 12 months to sell your existing property, though this can extend to 12 months if your new property is being built. During this period, you'll typically only pay interest on the bridging loan amount, with many lenders offering interest capitalisation to reduce immediate financial pressure.
Once you sell your existing property, you reach "End Debt" – your final loan amount after paying down the bridging facility with your sale proceeds.
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Book a chat with a Finance & Mortgage Brokers at Nurse Loans today.
Key Features of Bridging Loan Options
Loan Structure Options:
• Variable interest rate or fixed interest rate loans
• Interest-only repayments during the bridging period
• Option to capitalise interest to reduce monthly outgoings
• Ability to use an offset account to minimise interest charges
Typical Requirements:
• Loan to value ratio (LVR) usually capped at 80% to avoid lenders mortgage insurance (LMI)
• Demonstrated borrowing capacity to service both loans
• Evidence of marketing your existing property for sale
• Acceptable exit strategy within the specified timeframe
The Application Process for Healthcare Professionals
When applying for a bridging loan, lenders will assess your financial situation comprehensively. As a nurse practitioner, you'll need to provide:
• Recent bank statements showing your income and expenses
• Employment verification and payslips
• Details of your existing home loan
• Contract of sale for your new apartment
• Marketing evidence for your current property
Nurse Loans understands the unique circumstances of healthcare professionals and can access bridging loan options from banks and lenders across Australia. This means we can find suitable bridging finance solutions that align with your specific needs and circumstances.
Calculating Bridging Loan Costs
Understanding the costs involved is crucial for making an informed decision. When calculating bridging loan repayments, consider:
Interest Costs:
• Bridging loan rates are typically higher than standard home loan rates
• Interest rate discounts may apply based on your overall relationship with the lender
• Choice between variable loan rates and fixed interest rate options
Additional Costs:
• Stamp duty on your new apartment purchase
• Legal fees for both purchase and bridging loan documentation
• Valuation fees for both properties
• Potential early repayment fees if you sell sooner than expected
Advantages of Getting Pre-Approved
Obtaining loan pre-approval for bridging finance before you start apartment hunting provides several advantages:
• Clear understanding of your borrowing capacity
• Confidence when making offers on properties
• Streamlined application process when you find the right apartment
• Ability to negotiate with vendors from a position of strength
The pre-approval process involves a comprehensive assessment of your financial position, giving you certainty about the bridging loan amount you can access.
Making the Right Choice for Your Situation
Bridging finance isn't suitable for everyone, but it can be particularly beneficial for nurse practitioners who:
• Have found their ideal apartment and don't want to risk losing it
• Live in a strong property market where selling shouldn't be difficult
• Have sufficient equity in their current property
• Can comfortably service the interest payments during the bridging period
Whether you choose a traditional home loan approach or an investment loan structure for your existing property will depend on your long-term plans and tax considerations.
Working with Specialists Who Understand Healthcare Professionals
At Nurse Loans, we specialise in helping healthcare professionals access appropriate financing solutions. We understand that nurse practitioners often work shift patterns and may have complex income structures that require specialist knowledge to present to lenders effectively.
Our team can help you understand all available bridging loan options and guide you through the entire process, from initial assessment through to settlement of both your purchase and sale.
Don't let timing constraints prevent you from securing your ideal apartment. Call one of our team or book an appointment at a time that works for you to discuss how bridging finance could help you achieve your property goals.
