Category Archives: Bridging Finance

How Bridging Finance Works

Bridging Finance is what you need when you want to buy a new home, without first selling your existing property.

Bridging Finance may be exactly what you need to:

  • Purchase the home of your dreams
  • Increase the size of your property portfolio
  • Upside or downsize your existing property
  • Aquire a new property before selling your existing property

What is Bridging Finance?

Bridging finance, or a bridging loan, is a short-term home loan. It aims to provide homeowners with a loan to purchase a new property before you sell your existing one.

Closed and open bridging finance are the two main types of bridging finance accessible.

Closed bridging finance typically involves a bank. This is when the sales on both your new home and current home are unconditional, and all you need is to bridge the gap between the two settlement dates.

Closed bridging finance usually has a maximum term of 12 months.

Open bridging finance usually involves second-tier or non-bank lenders. You may consider using this home loan option, when you are wanting to purchase another property without first having sold your current home.

The Pros and Cons

Bridging finance can be a complicated affair. Therefore, if you are considering taking out a bridging loan, we strongly advise that you consider both the benefits and disadvantages of this method of financing.

The Pros

Knowing that you have financial support to tide you over, will help you search for a new home with confidence, even if you haven’t sold your existing property. It would also allow you to purchase your new dream home without selling your existing one first.

You may have the option to pay only interest on your bridging loan, or even to capitalise the interest completely. This can make it much easier to manage your repayments. Again, we can advise you of the advantages and disadvantages of both.

You could use any money left over from the sale of your current property to pay off your bridging loan. This allows you to pay off your bridging loan faster and with less interest.

The Cons

Your current home may not sell right away, leaving you paying interest for longer.

Your existing property may also sell for less than expected, leaving you with more debt than you may have initially planned for.

Need Bridging Loan Solutions? Platinum Mortgages Can Help

Here at Platinum Mortgages, we offer an extensive range of bridging loan options for borrowers New Zealand-wide.

We can provide you with the solutions for both open and closed bridging loans. This will give you the confidence to purchase your next property, while waiting to release profits from a previous venture.

Because no two people are in the same financial situation, we ensure that our lenders’ bridging loans are tailored to your specific needs. They’ll offer you quick, hassle-free finance at competitive interest rates, perfect for the loan term required.

Our Bridging Loan Options

Option 1: Main Bank Bridging Loans

Through major banks, we arrange closed-ended bridging finance. We propose this as a first port of call because interest rates are typically lower and there is less risk.

Under this option, we can help you approach a main bank once your property has sold and you have a settlement date locked in on your existing home.

Both homes will be secured, and you will have to service both mortgages at the same time.

Our main bank bridging loans are subject to servicing and affordability.

How Bridging Finance Works

Option 2: Second Tier or Non-Bank Lender Bridging Loans

We also offer open-ended bridging finance options.

You would choose this option if you have no settlement date yet on your existing home and intend to sell it in the next 6-12 months.

We assist you by approaching non-bank or second-tier lenders. They will enable you to purchase a new property, while your old mortgage is transferred from your current lender.

Security will be taken over both properties. Unlike Option 1, a lender fee as well as a broker fee will be added to your loan, though this can be negotiated. You’ll be charged with higher interest rates, because the lender is taking on greater risk.

There are options to service both mortgages at the same time, make interest-only repayments, or capitalise the interest entirely with a big balloon payment once your existing property sells.

However, keep in mind that if you opt to capitalise the interest, it will continue to be compounded weekly or monthly, potentially resulting in you paying more interest in the long run.

Gaps in cash flow are a natural part of life. If you are on the hunt for a bridging loan to help you settle on that dream property before you’re ready to sell your existing one, Platinum Mortgages can help.

To learn more about our bridging loan options or schedule a consultation with us, please get in touch with our team of professional, qualified Mortgage Brokers / Financial Advisers at [email protected] or 0800 LENDING (0800 536 346).

4 Non Bank Lender Advantages Over Mainstream Banks

Are you planning to buy your first home or a new investment property and wondering if there are alternatives or advantages to mainstream banks, such as non bank lenders? You might assume that your only option for a home loan is to go to a bank. Non-bank lenders can be a more viable alternative than you might think.

Non-bank lenders have increased competition in the mortgage industry. They have given homebuyers more options when it comes to getting the right loan for your needs.

4 Advantages of Getting a Home Loan From Non-Bank Lenders

What Is A Non-Bank Lender?

The term ‘non-bank lending’ refers to any lender who provides finance but isn’t a traditional, registered bank such as ANZ, ASB, BNZ and many more.

The Benefits of Getting a Home Loan From a Non-Bank Lender

Many non-bank lenders are well-established institutions. Non-bank lending can even offer you advantages over taking out a home loan through a bank. These benefits include:

Start-Up And Business Friendly

Banks often refer business owners to a specific business banking department. Their role is to understand your company and provide you with the lending you require. However many of these business bankers often end up being more a hindrance than a help.

It’s not uncommon for bankers to ask for business financials, budgets, projections and plans. This information is not always available to you as the client, when you need it. Platinum Mortgages can help you draw up a suitable plan, to get approved for the loan you need for your business.

More Flexible Criteria

If your credit is poor you know that you would most likely be rejected for a home loan by a bank. This is when non-bank lending may be a great alternative. Non-bank home loans usually have less restrictive financial criteria for potential borrowers. This also makes them useful if you cannot immediately demonstrate to a bank that you have the income level they demand.

If you have a default on your credit report, a bank will often dismiss you as a bad credit risk and decline your application outright. However, an experienced non-bank broker will take the time to understand your problem. They will present a plan to your lender to get your loan approved.

Lower Deposits

Banks usually require a deposit of 20% on a home loan. As house prices in New Zealand continue to rise, the deposit requirements rise as well. Consequently, getting onto the property ladder can seem like an impossible dream. This applies to most people, whether you , first-time home buyers, new immigrants, or anyone who has suffered a recent loss in equity.

However, the competition between banks and non-bank lenders and the greater flexibility offered by non-bank lending, means that they usually have lower deposit requirements than banks.

As a result, non-bank lenders have made home loans far more accessible for first-time buyers and others who may be turned away from traditional bank loans.

Non-Bank Lender

Specialist Knowledge

Because they’re subject to less regulation than a bank, non-bank lenders can offer more personalised customer service. Many focus on a niche product rather than a range of different services as well. This focus means that they often have specialist knowledge about a particular area, like the housing market.

Choosing non-bank lending for your home loan means that your Mortgage Adviser can often guide you through a more comprehensive array of options than you might get at a bank. Their expertise can help connect you with the best mortgage for your unique situation.

Buying a home can be one of the most significant investments you ever make. A Mortgage Broker from Platinum Mortgages, can give you expert advice on non-bank lending and help you find the best home loan for your needs. Get in touch with us at 0800 536 346.