Refinance Home Loan in Minyama QLD

Setting up a Bridging Home Loan for a Couple in Minyama

Navigating a Bridging Loan: A Young Family’s Path to Homeownership in Minyama

For many young families, the dream of upgrading to a new home comes with logistical and financial challenges. Such was the case for a couple in Minyama with two young children, who found themselves facing a dilemma familiar to many homeowners: they had found their dream home but were not yet ready to sell their existing property.

The property they wanted was unique and perfectly suited for their growing family. However, they were concerned that if they waited to sell their current home before making an offer, they would miss out on the opportunity to buy it. Additionally, they worried that selling their existing property first and waiting to find a new one could leave them out of the market for an extended period. After consulting with a mortgage broker, they opted for a bridging loan to navigate this tricky situation.

Understanding Bridging Loans

A bridging loan is a short-term loan designed to help homeowners transition between selling their current property and purchasing a new one. It allows them to secure their new home before selling their existing one, with a temporary structure that covers the financial gap. This type of loan is particularly useful in hot property markets where unique properties are snapped up quickly, and families need flexibility and speed to act on the right opportunity.

Bridging loans are not offered by every financial institution, and those that do offer them have varying guidelines. Typically, applicants only need to prove the ability to service the final loan amount, or “end debt,” as long as they have sufficient equity in their current property. In this case, the young family in Minyama had a healthy Loan-to-Value Ratio (LVR) of 70%, which gave them an edge in the application process.

The Client’s Situation: Timing Is Everything

The clients had contacted their broker as soon as they found the property they wanted to purchase. Their excitement was tempered by the reality that waiting to sell their current home could cause them to miss out on this rare opportunity. They needed a solution that would allow them to secure the new property quickly, without the pressure of selling their current home right away.

Their broker promptly assessed their situation and proposed a bridging loan as the best solution. Within three days, they had received formal approval for the loan, allowing them to make an offer on their new home without delay. The approval process was expedited to ensure they didn’t lose out on the property in Minyama, a highly desirable area known for its community feel, proximity to the coast, and family-friendly amenities.

Refinancing Home Loan Structure in Minyama

Interest-Only During the Bridging Period

During the bridging period, the structure of the loan was interest-only, which helped reduce the family’s monthly financial burden while they focused on preparing their existing home for sale. This meant that, although they had two properties under their name, they only had to make interest payments on the loan for the new property. So, we refinanced their existing home loan. They weren’t required to make any repayments against their existing loan, provided they sold their current home within 12 months of settling on the new one.

This structure gave them valuable breathing room. It allowed them to move their belongings and relocate their family into their new home before listing their existing property for sale. Without the pressure of juggling two mortgages, they could take the time to prepare their former home for the market, ensuring it would fetch a competitive price.

Successful Sale and Loan Reduction

In just two months, the family sold their existing home for an excellent price. With the proceeds of the sale, they were able to significantly reduce the balance of their new home loan. This not only lowered their financial obligations but also put them in a strong position to start their new chapter in Minyama without the looming burden of a large mortgage.

Once the bridging period ended, the loan reverted to a principal and interest (P&I) structure with a 30-year term at an interest rate of 6.29%. With their LVR at 70%, the couple had secured a favourable loan structure and could now focus on enjoying their new home and raising their children in a community they loved.

Key Takeaways: The Benefits of a Bridging Loan

For families in situations like this young couple, bridging loans can be a lifeline. They offer the flexibility to secure a new home without the need to rush the sale of an existing property. The interest-only structure during the bridging period can ease the financial strain, especially when it takes time to sell the old property.

However, it’s important to note that bridging loans aren’t available at every bank or lender, and assessment criteria can vary widely. Generally, having a strong equity position in your existing property, as this couple did with their 70% LVR, is key to securing a bridging loan. It’s also crucial to work with a knowledgeable broker who can guide you through the application process and help you move quickly when needed.

In the case of this Minyama family, the bridging loan allowed them to act decisively, secure their dream home, and successfully transition to a new phase in their lives without undue financial stress.