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Looking for Bridging Loans to get you over a financial hurdle? Let Nifty give you the lowdown!

Have you been considering Bridging Loans?

Have you been researching bridging loans to get you from point A to point B? Need a loan to tie you over for a small period? Well, we’re glad you stopped by! These types of loans can often be quite complex, so we thought we would explain. Today we will run you through what is a bridging loan, when you can use one and what to consider before applying for one. As a matter of full disclosure, Nifty does not offer traditional mortgage bridging loans, but we can offer some short term solutions that may bridge the gap between other financial circumstances, which we will discuss a little later. As always, we strive to keep our customers informed of all things finance. So, let’s get stuck in!

By the way, if you are curious, you can find details on loans from Centrelink here.

Bridging Loans

What is a Bridging Loan?

The Moneysmart website describes A bridging loan or bridging finance as short-term finance that covers the period between buying a new property and selling your existing property. It usually refers to a type of home loan that you take out when you are looking to move homes. Say you have an existing home that you are planning on selling, and you plan to buy another home with the intention of moving into it. You may need a second mortgage to purchase the second home. This is your bridging loan; aptly named as it is bridging the gap between your current home and your future one. In this scenario, you would have two home loans until you move and sell your first home. 

So I am just taking out another mortgage?

When we say you could have two active mortgages, don’t fret, it doesn’t necessarily mean that you will be paying the normal repayments for two mortgages. Both mortgages will still incur interest, but you will not often have to pay the full interest and capital amount for each loan during the bridging period. Often the bridging loan will only require you to pay the interest component on your new mortgage, and some bridging loans only require you to make repayments on the original mortgage until the moving process is complete and your old house is sold. So in essence, your bridging loan is often an interest only loan! This makes your regular repayments affordable during the transition period so you can get on with moving. Clever, right?

Advantages of bridging Loans

1. Affordable Repayments during the transition 

Bridging finance often involves only paying the interest on their new loan or reduced repayments. In terms of your weekly or fortnightly pay cycle, this can make the repayments very affordable. Especially when comparing this to the costs of having two normal mortgages running at the same time or renting (which we touch on below).

2. Won’t always need to wait until your current house is sold

There is always going to be a slight (or big) gap between when you want to sell your first home and move into your second one. But how long that might be? Well, that could be anyone’s guess! You can’t always predict how long it will take to sell your old home or tell if you are going to run into any other unforeseen issues. The good thing about some bridging loans is that you can move into your new home while your old one is still being sold.

3. Avoid going back to renting

There is always going to be a bit of an unknown time between selling the old home and the new one settling. So renting is not always a practical option. A lot of rentals will want to lock you in, often for a long period. Not only that, but you now need to move from your old house, to the rental, and then again to the new home. We know what you’re thinking, no thanks!

Disadvantages of bridging loans

1. Extra Interest

You do have the option with some bridging finance loans to purchase your new home before your old one has sold. While this does have advantages, it can be a double-edged sword. If your first home takes longer than you anticipate to sell, this can cause you to incur much more interest. Due to the long loan terms of home loans, which can be decades, this extra interest can add quite a large amount to the total you have to pay, especially due to the interest compounding. So make sure you also do your research into your local housing market.

2. Termination Fees

Different loans and different lenders all have varying terms and conditions. One of these may be termination fees or exit fees and charges. If your mortgage has any of these fees or charges, you may not be able to apply for a bridging loan, or you may have to pay much more in fees. Again, this is something you will need to check carefully with your lender to make sure if a bridging loan is a good option for you or not.  

Always ask for professional advice!

Bridging loans are complicated (if you hadn’t already realised)! That is why you should always consider seeking independent legal, financial, taxation or other advice before taking out one of these loans. Taking out a mortgage bridging loan is not a small decision and should not be made lightly. To make things easier, we have prepared a list of questions that you can ask one of these specialists:

  • Should I try for a bridging loan before or after I have a buyer for my current house?
  • How much extra interest should I expect and how will this impact my total loan term?
  • Will I have to pay any termination or exit fees?
  • Will a bridging loan be suitable for me?
  • Would there be better options based on my circumstances than a bridging loan?
  • What tax implications will be applicable to me?

So, can I apply for bridging loans with Nifty Loans?

While Nifty does not offer traditional mortgage bridging loans, we can offer short term loans to get you from point A to point B. Some examples of the types of moving house personal loans we offer can be found in the table below. 

Loan TypeAmountTerm (Months)Common Loan Reason
Small Personal Loan$300 – $2,0006 – 9Rental Bond Loan
Medium Personal Loan$2,100 – $4,6009 – 24 Moving Expenses Loan
Large Personal Loan$5,0009 – 24 Renovation Loan

I’m in a hurry to move? How fast is Nifty Personal Loan?

We are glad you asked! To apply for a fast personal loan, our application can take only minutes to complete! This is because our smart form uses the latest in technology to help you accurately fill out the required information. Once you have completed your application, we will get to work assessing it to make sure it is suitable for your situation. When you apply during normal business hours, this should be within 60-minutes! Finally, the best part! Once you sign your contract, you can even receive your funds instantly at no extra cost! Just make sure you have an NPP enabled bank account, which covers 90% of Australian bank accounts!

Want to know more?

Found this article about bridging loans interesting? Well our knowledge base doesn’t stop there! If you want to know more, why don’t you check out our blog, which has loads of finance-related articles?

On the hunt for same day loans? Check out your options!

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Andy Andy

AUTHORITATIVE SOURCE

Andrew Bell

Since founding Nifty in 2016, Bell has continued to make waves within the local financial sector for his continued ambition and willingness to adopt emerging technologies.

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Loan Costs

Large Loans

Large Loans

Large Loan Example

$5,000 - $10,000

Loan amount:
$5,000
Terms:
9 - 24 months
Establishment fee:
Variable
Monthly Fee:
$0
APR:
21.24%
Comparison Rate:
48%**
View Example
Loan amounts:
$5,000
Terms:
18 months, (78 weekly repayments)
Establishment fee and Total Interest:
$1,897.54
Total payable:
$6,897.54
Weekly installments:
$88.43
View Loan Details
Medium Loans

Medium Loans

Medium Loan Example

$2,001 - $4,600

Loan amounts:
$2,001 - $4,600
Terms:
9 - 24 months
Establishment fee:
$400
Monthly Fee:
$0
APR:
47.8%
Comparison Rate:
65.86%**
View Example
Loan amounts:
$2,500
Terms:
24 Months, (104 weekly repayments)
Establishment fee:
$400
Total other fees:
$1,609.44 (reducing interest)
Total payable:
$4,509.44
Weekly installments:
$43.36
View Loan Details
Small Loans

Small Loans

Small Loan Example

$300 - $2,000

Loan amounts:
$300 - $2,000
Terms:
6 - 9 months
Establishment fee:
20%
Monthly Fee:
4%
APR:
N / A *
Comparison Rate:
138.37%**
View Example
Loan amount:
$1,000
Terms:
6 Months, (24 weekly repayments
Establishment fee:
$200
Total other fees:
$240
Total payable:
$1,440
Weekly installments:
$60
View Loan Details

* Not applicable. Small loans do not charge an annual interest rate.

** WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Different loans may include other payable fees and charges. All fees and charges will always be displayed on your loan contract.