You can buy a new home before you sell your existing property with a relocation home loan.
A relocation home loan bridges the financial gap between two home loans.
Relocation home loans are commonly used to finance the purchase of a new property while your current property is being sold. They can also provide finance to build a new home while you live in your current home.
The lender takes security over both properties and lends against these properties until the sale and purchase process on both is complete. During the bridging loan period, your home loan will generally be charged as an interest-only loan. Many lenders offer interest rates comparable to the standard variable rate, or slightly above.
How does a Relocation home loan work?
Some lenders might let you to capitalise the interest on a relocation loan, so you don’t have to make loan repayments during the bridging period. If you choose to capitalise the interest, you’ll most likely have a slightly higher new home loan to cover it.
Some lenders will give you six months to sell your home if you’re buying an established home and up to 12 months if you’re building.
When you sell your first property, the funds from the sale are applied to the relocation loan, and any remainder becomes the end debt or new home loan. At this stage your home loan will usually revert to the lender’s standard variable interest rate or the interest rate you’ve negotiated.
Relocation Home loans. What you need to know.
The right relocation home loan for you will depend on a few things:
1. How long do you need the funds for?
2. Do you have an unconditional contract on the property you’re selling? Or are you yet to sell?
3. Is your new property a new build?
4. Are the properties you’re buying and selling for investment or where you live?
5. Can you meet the repayments on your current loan and the relocation loan?
Your answers will help your mortgage broker find the right Relocation Home Loan for you and how much you can borrow.
Relocation Home loan pre-approval
It’s important to understand which option is the right one for you before you sign a contract for the sale or purchase of your property. Your local Loan
Market mortgage broker will talk you through your options and help you organise a relocation finance pre-approval. Call Chris Maguire on 0432 389 388.