Bridging loan?

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Fizzy
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Joined: Wed Aug 12, 2009 3:42 pm

Bridging loan?

Post by Fizzy »

I currently have a mortgage on my house, but intend to purchase a block and build in the near future. What would be the best course of action here?

Ideally I would like to purchase the block first then commence building whilst still living in the current house, but dont think i can afford to service two loans concurrently.

So is it best to sell and payout the current mortgage first, then re-apply for another loan to build? (downside is that I'll then have to rent during the construction period)

If so, can I get more reassurance from the lender than just a pre-approval for the new loan BEFORE i sell the current house?

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Otto Dargan
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Re: Bridging loan?

Post by Otto Dargan »

Most people would do this in the following order:

1. Buy land.
2. Get pre-approval for construction & commence council approval process.
3. While waiting for council approval begin selling your house.
4. Ideally sell your house with a long settlement, allowing you to build prior to completing the sale OR negotiate a lease back from the vendor until your house is complete.

Ultimately if you can't afford both loans at the same time then you'll have to sell your home. With a leaseback or a long settlement then you can avoid moving house twice but still have the security of knowing your house has sold.
Otto Dargan
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P | 1300 889 743
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Fizzy
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Joined: Wed Aug 12, 2009 3:42 pm

Re: Bridging loan?

Post by Fizzy »

Thanks for the quick reply. Does this mean that I apply for loan twice? Once for the land, then later for the construction?

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Otto Dargan
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Re: Bridging loan?

Post by Otto Dargan »

Yes that is correct. If you are building right away then we would just do one loan, if the land will be purchased long before construction then we'd do a land loan and a preapproval for construction.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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