What is Bridging Finance?

The house-hunting game is largely a matter of timing. You need to buy when the right opportunity arises, and sell your existing property in order to finance your new home. When time is not on your side, you may need a helping hand in the form of bridging finance.

Just as the name suggests, bridging finance is used to bridge the gap between the sale of your existing home and the purchase of your new home. Bridging finance is offered by many banks and lenders, including ANZ.

ANZ offer a variety of bridging finance solutions that can be adapted to your situation. For example, if you are already an ANZ home loan customer, ANZ may be able to help you to finance your new home by increasing the amount of your existing loan. This would enable you to finance the new property before the sale of your existing home is settled.

Perhaps you would like to buy a new home and pay for it in full with funds from the sale of your existing house. Rather than wait until the sale of your house is settled, ANZ may be able to offer you a short term home loan for six to twelve months. Even if you have your existing home loan with another lender, ANZ can offer you bridging finance by transferring your existing loan to an ANZ product.

ANZ offer their standard variable rate for bridging loans, while some lenders have a higher rate used specifically for bridging finance. ANZ allow some flexibility with bridging finance repayments, as interest only payments are available during the bridging period, which means that your cash flow could be temporarily freed up to be used towards costs associated with moving house. Bear in mind that the ANZ's loan approval fees still apply to their bridging finance solutions, which can add to the cost of your move.

Once the sale of your original property has been settled and the bridging finance has been paid back to ANZ, the loan can revert to a principal and interest loan.

While bridging finance can offer convenience and help to ease the pressure of selling your existing home right away, it may be a more expensive option to finance your new home than other options available. When considering your new home purchase, speak with your financial broker to find out about a range of other solutions, such as the use of deposit bond products.

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