As a mortgage broker serving the South East Brisbane region for over a decade, I've helped many clients navigate the complexities of bridging loans. With the unique characteristics of our local property market, particularly in areas like Bulimba, Coorparoo, and Camp Hill, bridging finance can be both a powerful tool and a risk that means it may not be suited to your circumstances.
Please note that this article is provided as a general guide only and does not take into consideration your personal circumstances. We recommend you contact us for a tailored recommendation before making any decisions.
What is a Bridging loan?
A bridging loan is a short-term financing solution designed to help property owners "bridge" the gap between buying a new property and selling their existing one. This specialised type of loan essentially allows you to temporarily hold two properties – covering both your existing mortgage and the purchase of your new home – until your current property sells. The loan typically runs for a period of 6-12 months. It can be structured to capitalise the interest payments during this period, meaning you may not need to make repayments until your existing property sells, at which point the bridging loan converts to a standard mortgage on your new property.
Advantages for SE Brisbane Property Owners
Capitalising on Our Strong Market
South East Brisbane's property market has historically shown strong resilience. Areas like Norman Park and Hawthorne have consistently demonstrated solid buyer demand, reducing the risk of extended selling periods.
Maintaining Competitive Edge
In sought-after suburbs like Cannon Hill and Seven Hills, where properties often sell quickly, bridging finance allows buyers to act decisively. This can be crucial in securing properties in popular school catchments or near major transport infrastructure developments.
Renovation Opportunities
Many properties in areas like Camp Hill and Holland Park are older Queenslanders with renovation potential. Bridging loans can help homeowners transition while major renovations are completed, particularly valuable in our climate where renovation timeframes can be affected by weather.
Key Risks and Considerations
Interest Rate Impact
With bridging loans typically carrying higher interest rates, the cost can be significant. Based on current market rates in SE Brisbane, expect to pay 1-2% above standard mortgage rates. On a typical local property value of $850,000, this additional cost needs careful consideration.
Market-Specific Timing Risks
While our market is generally strong, seasonal factors affect selling times. December-January can be slower due to heat and holidays, potentially extending bridging periods.
Property Type Considerations
Different property types in our region carry different risks:
- Apartments in areas like Woolloongabba and Kangaroo Point may take longer to sell due to new development competition
- Character homes in suburbs like Coorparoo and Camp Hill typically maintain stronger demand
- Properties in flood-prone areas require additional consideration for both selling timeframes and insurability
My Professional Recommendations
1. Have a Clear Exit Strategy
Ensure you have multiple backup plans for selling your existing property. In SE Brisbane's market, this might include being prepared to adjust pricing or considering rental options if the sale takes longer than expected.
2. Conservative Timeframe Planning
While properties in our region are currently on market for a limited amount of time (30-60 days) I advise clients to plan for the worse case scenario and account for settlement periods and potential delays.
3. Buffer Requirements
Careful consideration to your current financial position and ensuring you have additional funds to cover at least 6 months of double payments. This is particularly important given our region's exposure to weather events that can impact property sales.
As a local broker, I've seen bridging loans work extremely well for prepared clients but create significant stress for those who haven't fully considered the implications. Success largely depends on realistic expectations, strong financial buffers, and thorough understanding of our local market dynamics.
To know more, please feel free to Contact Us and our team and I will be glad to assist.
Disclaimer:
Credit Services and advice and any statements in this email relating to matters concerning Credit Services (as defined in the NCCP Act), are made on behalf of G F Pain Pty Ltd T/As Astute Camp Hill ABN 41 602 343 484 a corporate authorised representative of Astute Financial Management Pty Ltd (Australian Credit Licence 364253) and its authorised representatives. This email and any attachments may contain confidential or privileged information. If you are not the intended recipient, please delete this message from your system and notify us immediately by return email. Email transmissions cannot be guaranteed to be secure or error free. No guarantee is made that any attachments are virus free, it is important to scan all emails for viruses and defects before opening and using attachments. If you have any doubts about the authenticity of an email sent by a member of the Astute group of companies, then please contact us immediately.
General Advice Warning:
This communication contains general information only and in no way constitutes the provision of professional advice, nor should it be relied on as a substitute for financial, credit, accounting, legal or other professional advice. We have not taken into account your financial situation, investment objectives or particular needs. Before making an investment or financial decision, a person must seek appropriate independent professional advice and also consider whether this information is appropriate to their needs, objectives and circumstances. The author as well as their representatives, agents and employees give no guarantees and make no representations, express or implied, as to the accuracy, currency, completeness or suitability of the information contained in this document. Nor do they accept any liability whatsoever as a result of any information herein being incorrect, incomplete or unsuitable or as a result of a person in any way using or relying on the information herein.
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