You may have found your dream home but have not yet managed to sell your existing property. Without the proceeds from the sale of your current property, many people can find it difficult to buy the new property. Bridging finance enables people in this situation to purchase a new property, whilst you await the sale of your existing and offers financial relief during this period. Unfortunately, banks sometimes decline bridging finance leaving you in a difficult situation.
According to industry experts, bank lenders are increasingly blocking homeowners from receiving bridging finance. This strict position by the major banks is restricting the property market by delaying home purchases and forcing homeowners to sell their homes before they’re able to buy a new one.
Some mortgage experts believe that the banks are claiming that bridging finance can produce bad debt – so basically it’s just not worth it for the banks to offer. Effectively bridging finance becomes like a second mortgage on the first property and banks don’t like increasing the amount of money they lend, because in many cases they don’t have enough collateral to secure that extra money against.
Once upon a time when banks weren’t getting a good margin, they would have to lend as much as they could, now that they’re getting a much better margin, they’re less inclined to approve riskier loans. For this reason, banks are known to decline bridging finance.
Mortgage experts also believe the banks’ dislike to bridging finance may be due to the fact homes in certain areas are taking a lot longer to sell these days, which elevates the risk lenders assume when providing a bridging finance loan.
At the Australian Lending Centre we have access to a panel of non-bank lenders who offer bridging finance during the sale and purchase of property. To speak with a loan consultant regarding bridging finance today, simply call 1300 138 188 or fill in an enquiry form to your right and a loan consultant will call you shortly.