Ready to sell up and buy your next home? If you already have a Westpac home loan with us, you might consider applying for a bridging loan. Other possibilities include loan porting and other house financing options to help you into your new house.
If you have a home loan with us, you could choose to bring it with you, or ‘port’ your loan. Loan portability means transferring the mortgage on the home you sell, to your next home. Choosing this option saves you time, and avoids some of the hassles of new home ownership.
Your current property is held as security on your existing mortgage. When you sell this and buy again, the loan security will be transferred to your new home. Your current home loan balance, interest rates and other attached features – such as a linked offset account, will also move with you. All you need to do is continue with your regular home loan repayments.
Considering porting your loan? Read more about the features and benefits of home loan portability, and how it could work for you.
A bridging loan lets you finance your next home purchase, while waiting for your current house to sell. This is a short-term loan that’s additional to your existing home loan. A bridging loan is available for up to 12 months. It means you will have two loans during the bridging period and will pay interest on both. Let’s break down the two basic types of bridging loan: with end debt and without end debt.
This situation occurs when the sale proceeds of the existing property will be enough to cover the entire amount you need to borrow with a bridging loan.
For example, you will have no ‘end debt’ if you’re downsizing and the sale proceeds of your existing property will be enough to cover the entire bridging loan amount.
With this loan type, you repay the bridging loan in full along with any interest and fees when your current property sells. This means you will not have any ongoing bridging loan or end debt.
This happens when you need to borrow additional funds to purchase your new property with a loan that will continue after you sell your current home.
You most commonly have an end debt situation if you’re upgrading to a more expensive property or in the case of separation or divorce where equity in the current property is being split.
In this scenario, a bridging loan actually means that there will be two loans setup:
The end debt loan is set up as a standard owner/occupier home loan. You can choose from any of our existing variable or fixed rate loans for this loan type.
When the existing property sells, the bridging loan is completely paid out from the proceeds. Any remaining funds may be used to partially pay down the end debt loan. The end debt loan then remains open – you continue to make repayments on it until it’s paid down. This is effectively your ‘new’ home loan.
The upsides:
Possible downsides:
A dedicated lender will get back in touch with you within 1 business day. They’ll answer your questions about home loans and guide you through next steps. Your lender will be able to start the application for you.
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With a bridging loan, you may need at least 20% of the purchase price as useable equity and your borrowing is restricted to no more than 80% of the combined property values. You’ll also need to find the 5-10% deposit, and if you haven’t sold your property, you’ll need this as savings.
Other loan types may allow you to borrow up to 95%. It is important to note that for loan products where you borrow over 80% of the combined property values, you will likely need to pay Lender's Mortgage Insurance.
You can use our borrowing power calculator to see what an LVR of 80% could mean for your repayments in a standard home loan. Our home equity calculator will give you a sense of the useable equity in your current home.
When buying your next house, take the time to explore your loan options. Circumstances change. You may have a different cash flow or different financial goals in future than you do currently, so take time to consider how these may change and plan accordingly. The first choice might be deciding between a variable rate home loan, fixed rate home loan or you might want to split your loan between fixed and variable.
Talk to your lender or mortgage broker about what's best for you and your eligibility for different sorts of home loans. As a rule of thumb, loans with more flexibility or features may have a higher interest rate or incur additional fees.
Gives you greater flexibility
You can:
Good to know
Your loan repayments can go up or down during your loan term as the interest rate changes with the market.
Provides certainty in repayment amounts over time
You can:
Good to know
If you’re locked in, you won’t be able to take advantage of lower interest rates if they arise without having to pay break costs.
Gives you the best advantages of fixed and variable loans
You can:
Good to know
You can choose to turn your variable loan to a fixed loan at any time.
Read more about the features of different types of home loans and what may work best for you.
There are two options for home loan repayments. Typically, you will make both principal and interest repayments (this means paying the principal balance you borrowed and the interest accrued). You could also choose to pay only the interest for a set period of time.
Here’s a quick summary of the different repayments types:
Principal and interest repayments
Interest only
If you want more detail about principal and interest and interest only repayments, read more about different repayment types.
You can also use our calculator to work out how much your home loan repayments could be, and our interest rate change calculator for when rates increase or decrease.
Choosing the right kind of home loan for your next home is an important decision. It’s worth doing your research and getting independent financial advice.
If you have any questions about loan options, or any of our home loan products, request a call back and talk to a Westpac lender about your options.
Upgrading, downsizing, buying a second home to move to, or keeping your first home. Learn how we can help make your next move a little easier.
Refinancing your home loan may be very rewarding. It could help you take advantage of a lower interest, reduce repayments or borrow money for things you might need.
The equity you have in your home can open the door to additional funds. Find out how you can unlock this for a home renovation, to buy a second property, or other things.
Conditions, credit criteria, fees and charges apply. Residential lending is not available for Non-Australian Resident borrowers.
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information and if necessary, seek appropriate professional advice. This includes any tax consequences arising from any promotions for investors and customers should seek independent, professional tax advice on any taxation matters before making a decision based on this information.
