Bridging loan for new home purchase amidst property sales

Background

The clients were in a new relationship, each owning a property with small mortgages on each. They wanted to buy a jointly owned home and found their dream house in a new town, where they had also secured new employment. One of their properties had sold but with a long-term settlement of 5 months, while the other was rented. They required a bridging loan to settle their new home while waiting for the long-term settlement on one property and the ability to market the rented property when the timing worked for them.

Challenge 

  • Their main bank wasn’t willing to support their application due to open bridge for one property and later settlement for the other 
  • New jobs in a new location 
  • Uncertainty of end position and timing after property sales. 

Mitigants 

  • Their mortgage adviser provided detailed information so potential risks and mitigants could be assessed 
  • Good LVR position at 61% 
  • Good affordability with a positive UMI position (using conservative end position amounts) 
  • Strong, achievable exit strategy 
  • Hard-working couple who are highly experienced in their respective fields. 

Solution 

Avanti provided a 12-month interest-only first mortgage, allowing the clients to relocate and go unconditional on their new home.

  • Loan amount: $896,000 
  • Interest rate: 10.95% p.a. 
  • Term: 12 months first mortgage 
  • Avanti fee: $705 
  • Adviser fee: 1% 
  • LVR: 61% 

If the loan is repaid in full within the 12-month term, only a $23 prepayment fee will apply. We used purchase price and desktop valuations, no need for RVs. 

Disclaimer: This case study is solely for information purposes and is not intended to be financial advice. Neither Avanti Finance nor any person involved in this case study accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation or omission, whether negligent or otherwise, contained in this case study.