Buying your next home

A bridging loan could help you purchase a new property to live in, before you sell your existing home.

It's a temporary loan, usually up to 6 months, and you’ll need to have your existing home loan with us. You'll need to sell and settle your current property within the loan term.

The proceeds from your property sale will go towards paying off your bridging loan. If you sell your house for less than the bridging loan, you could end up with a higher home loan balance than you expected. 6 Bridging finance is a facility of the Mortgage Shredder Home Loan only. Close

You don't need a deposit when you take out a bridging loan. A bridging loan is designed to help you buy a new property before you sell your current home. Therefore, the balance of the bridging loan will be paid once you sell or will be added to the balance on your new mortgage.

Equity is the difference between your property’s market value (what you could sell it for) and what you owe on your home loan.

You may be able to borrow against the equity in your home, instead of using a cash deposit to buy a new home. Depending on your situation, you may need to pay a smaller deposit to avoid Lenders Mortgage Insurance.

How much you can borrow for your next property depends on a few things, such as your current equity and financial situation, as well as the reason you're buying your next property.

A common misconception is that you can use all your equity to buy another property. In most instances, you could borrow up to 80% of the value of your home.​

For example, here’s how Sarah can calculate her usable equity:​​

• Calculate 80% of the value of Sarah’s home: $500,000 x 80% = $400,000​​
• Take the 80% value of Sarah’s home and subtract her current outstanding debt: $400,000 - $320,000 = $80,000.​​

This means Sarah has $80,000 worth of usable equity to put towards a deposit, as well as other buying costs like stamp duty and settlement fees.

If the usable equity isn’t enough to cover the full deposit and any stamp duty and settlement costs, Sarah will also have to make a cash contribution.​