Bridging Loans

Bridging Loans(aka relocation loans)! What are they and how do they help you move?

So what exactly is a relocation loan?

It’s exactly what the name implies. A loan that helps you purchase a new home whilst you wait for a buyer to purchase your current home. Giving you the cash you need to buy, before you’ve had the chance to sell. 

These loans sound helpful right? 

But how much you can borrow?

The size of the loan that you receive is based on the following calculation:


Value of your new home + outstanding mortgage balance - expected sale price of your current home

And what happens to your existing loan and your repayments?

The structure of a bridging loan does vary by lender and generally lasts around 6 months, so your repayments will depend on who you take the loan out with. Let’s take a look at how the loan might be structured:

• Sometimes you’ll only need to make repayments on your existing home loan. Over the period the interest of the bridging loan will get added to the overall loan value of your bridging loan, but you won’t need to make any repayments on this until your property is sold.

• Alternatively, some structures require you to start repaying the bridging loan straight away - so you’ll be paying back your original home loan and the bridging loan. However, you should only need to repay interest on the bridging loan.

There are a number of considerations that you need to bear in mind if you’re exploring the prospect of a bridging loan. It’s best to speak with a Robert Simpson mortgage broker before you commit to anything, to ensure that it’s right for your situation.