Whether you’re upgrading our downsizing, moving to a new area to be closer to work or just looking for a change, buying your next home is exciting for the whole family. There are three main options available when looking to buy your next home; you can take a traditional home loan by simply selling your existing home, paying out your existing loan then buying a new home and getting a new home loan; you can keep your existing home loan if it’s portable; or you can look at a bridging loan.
Portable home loans
Just as the name suggests, if you want to take your home loan with you when you move, you’ll need a portable home loan! Luckily, many standard home loan products now offer this feature which also happens to save you money when you move. That’s because you’re saving on loan setup costs you’ve already paid on your current home loan. Instead of paying out your existing loan, a portable home loan lets you keep your current loan and replace the security (your home), saving you time and money. Wouldn’t it be great to know that if you plan to move again in the future, you can take your loan with you!
Bridging Home Loan
When you’ve found your new home but still haven’t sold your existing home, bridging finance can offer the solution you’re looking for. Because you don’t yet have the money you need from the sale of your existing home to put towards your new home, a bridging home loan means you can confidently go ahead and make your new purchase while you’re waiting for your current property to sell.
Bridging Home Loan Features
- NO REPAYMENTS on the loan for your new property until your home is sold (or the agreed loan time).
- Interest only repayments available if you choose.
- The home loan will revert back to your chosen loan option once the initial property is sold e.g. Principal and interest, fixed rate, line of credit etc.
- Bridging home loans usually have terms of up to 12 months to give you the breathing space you need to sell your existing home.
Let’s take a look at a Bridging finance customer example:
Mandy and Ben – Buying a bigger home
Mandy and Ben have found the perfect new home, complete with 4 bedrooms to accommodate the kids and also have a spare room to be used as a study. They really didn’t expect to find the house they wanted so quickly, but signed the contract immediately so they didn’t miss out. Now its two weeks down the track and they are due to settle on their new property in only another 2 weeks time! They haven’t even had their first open inspection yet! The agent is confident they will have a buyer within the next month, but then of course it will be another month after that before settlement, and they really need the money from that sale to use towards their new purchase. A bridging loan is the perfect solution for Mandy and Ben. This means they can borrow extra money for up to 12 months to cover the new purchase, and then when their home is sold, the proceeds from the sale of their existing home are used to reduce their total borrowings.
Tony and Julie – Constructing a home
Tony and Julie have always wanted to build their own home and now it’s finally time. They’ve found a block of land in their favourite street and are just about to sign a contract with a builder. The question is, where are Tony and Julie going to live while their home is being constructed? They need money to purchase the land and make progressive payments to the builder and this is tied up in their existing property which they will need to sell. Selling their home and living with their parents just isn’t an option and the thought of having to move twice by renting and then moving again when their home is completed is not an attractive option either. Tony and Julie decide the perfect scenario would be if they could continue to live in their home until their new house is constructed. A bridging home loan makes this possible.
Moving House Home Loans
Assured offers a wide range of home loans when you’re looking to move house, for all types of borrowers. With access to over 30 lenders, you’re simply spoilt for choice!
Standard Variable Rate Home loan
A Standard Variable rate mortgage is traditionally the most popular type of home loan offering plenty of useful features and flexibility. The rate goes up and down depending on the market. A variable rate home loan can be linked to an offset account, helping to reduce your overall interest.
Fixed rate mortgages are also popular with investors because they offer you the security of a fixed rate (which means set repayments) for a given period. This means you have the peace of mind when it comes to budgeting, knowing that your repayments aren’t going to change on you for the term you have selected. Fixed rates can range from 6 months to 10 years.
A basic variable rate mortgage is simple to understand and easy to use and is ideal for borrowers who are looking to make minimum payments and require less flexibility than a standard variable rate loan.
A line of credit allows you to only pay interest on the money you actually utilise. These products allow you to utilise the equity in your property. You can use these funds for any personal purpose and like a credit card, any principal repaid is available to redraw.
This type of home loan is especially attractive to investors who need ready access to funds.
A Low Doc loan (low documentation) requires a declaration and BAS statement. They usually come with a higher interest rate. Assured offers a broad range of low doc loans, which are ideally suited to self-employed people unable to provide evidence of income.
A great option for investing in property is to build. Assured Home Loans offers a range of construction home loans for investors. Construction loans are generally interest only for the building period, but then you are able to select from a variable rate, fixed rate home loan, line of credit and so on.
Perfect for investors, an interest only mortgage will help you maximise the cash flow on your property.
