If you have found a new home, but yet to sell your current home, you may be entitled to a loan for to help smooth the relocation process (commonly called a ‘bridging loan’).
When you use a loan for relocation purposes, the lender you choose takes security over both properties and lends against these properties until the sale and purchase process on both is completed. During this loan period, your home loan will generally operate as an interest-only loan. Many lenders offer interest rates comparable to the standard variable rate, or only slightly above.
When you sell your first property, the proceeds of the sale are applied to the loan used during relocation, 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 have negotiated.
Many home loans these days have a loan portability feature – either in part or total. Portability allows you to transfer your current loan from your old property to your new one, thereby avoiding many of the setup and ongoing costs associated with a new loan.
Not all lenders and loans will have this feature so make sure you check with your mortgage broker when you are setting up your home loan.
Loan for relocation pre-approval
It’s a good idea to get an expert on your side to discuss a loan for relocation pre-approval; this way you’ll be ready to sign a contract for the sale or purchase of your new property as soon as you find it.
Source: Lindy Kelly, Loan Market Maroochydore