Bridging Finance

Critical information sheet

Our loan guide

Bridging Finance

Loan amount

Starts from $100k

Interest rates from

1st Mortgage - From 7.99% p.a. / 2nd Mortgage – From 14.99% p.a.

Loan term

Up to 12 Months

Pre-approval time

24 – 48 hours

Unconditional approval & settlement time

5-10 Business days

Repayments

Interest Only & Capitalised Interest

Security

Required with funding possibilities up to 80% Loan to Value Ratio (LVR)

What you need to know

Can be used for

Start-ups/new businesses eligible

Can borrow higher amount loans

Bad credit history can be considered.

Documents required

Valid identification proof

Security Details

Exit Strategy

Others depending upon loan product

*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.

What you should know about Bridging Finance

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Pros and Cons of Bridging Finance

Pros

Speed: Bridging loans can be arranged quickly, often within a few days, making them ideal for urgent financial needs.

Flexibility: Can be used for various purposes, including property purchases, renovations, and business financing.

Facilitates Property Transactions: Helps in purchasing a new property before selling the existing one, avoiding the need for temporary housing or losing out on a desired property.

Short-Term Solution: Provides a temporary financial solution until longer-term financing can be secured or an asset can be sold.

No Monthly Payments: Some bridging loans are structured with no monthly repayments, with interest rolled up and paid at the end of the term.

Easier Approval: Lenders focus more on the value of the collateral and the exit strategy rather than just the borrower’s credit history.

Cons

High Costs: Interest rates are typically higher than standard mortgages. Additional fees, such as arrangement fees, exit fees, and valuation fees, can also add up.

Short-Term Nature: Designed for short-term use, usually between 1 to 12 months. This requires a clear and feasible exit strategy to repay the loan.

Risk of Repossession: If the loan is not repaid on time, the lender can repossess the property used as collateral.

Pressure to Sell: If using the loan to bridge the gap between buying a new property and selling an old one, there may be pressure to sell the existing property quickly, potentially leading to a lower sale price.

Uncertain Market Conditions: Changes in market conditions, such as property value drops, can impact the ability to repay the loan if the exit strategy involves selling a property.

How does a Bridging Loan work?

A bridging loan operates by juggling the finances of your existing and new properties.

Here are a few examples to illustrate how bridging loans work in different scenarios

Scenario:

A company needs $250,000 to cover an unexpected cash flow gap due to a delay in receiving a large payment from a client.
The company expects to receive the payment in three months but needs the funds immediately to maintain operations.

Solution:

The company secures a bridging loan for $250,000, using him home as a second mortgage collateral.
Once the payment from the client arrives, the company repays the bridging loan.

Scenario:

A company needs $500,000 to make an ATO debt repayment which has accumulated over a couple of years.
The company needs the funds immediately to avoid default listing by the ATO.

Solution:

The company secures a bridging loan for $500,000 using his unencumbered property worth $1M as collateral.
Once the ATO dues are cleared, he can refinance the bridging mortgage through a major bank for a longer term.

Scenario:

Sarah wants to buy a new house worth $1,000,000 but hasn't sold her current house, which is worth $800,000 with $200,000 owing.
She needs a 10% deposit funds to secure the new property quickly, as the real estate market is competitive.

Solution:

Sarah takes out a bridging loan for $400,000, using his current house as collateral.
This loan allows her to complete the purchase of the new house.
Once she sells her current house, she uses the proceeds to repay the bridging loan.

Scenario:

John, a property developer, plans to buy a dilapidated building for which he needs a loan of $200,000 and needs an additional $100,000 for renovations.
He intends to sell the renovated property for $800,000 within a year.

Solution:

John obtains a bridging loan for $300,000 to cover both the purchase price and the renovation costs.
After renovating, He sells the property for $800,000.
He repays the bridging loan, including interest and fees, from the sale proceeds and makes a profit.

Scenario:

Emma finds a property at an auction that is significantly under market value but needs to complete the purchase within 28 days.
She doesn’t have enough liquid funds immediately available.

Solution:

Emma takes out a bridging loan against her existing home to cover the purchase price.
She then arranges for a traditional mortgage to refinance the property and repay the bridging loan.

How do I apply for a bridging finance?

Submit Application

First step is to simply fill out the application form with the required information and loan request.

Get Indicative Quote

Once the application is received, our lending specialist would get an indicative quote within 24-48 hours.

Letter of Offer (LOO)

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

Valuation and Legal Docs

On receipt of signed LOO, the lender would initiate valuation and get loan docs prepared.

Disbursement

Once we receive the mandate to proceed basis indicative quote, we get a formal letter of offer from the lender.

Bridging Loan vs Standard Home Loan

When comparing bridging loans to standard home loans, several key distinctions come into play

Start loan application

Bridging Loan

Purpose: Geared towards purchasing a new home secured by equity in an existing property, with the intention to sell within 12 months.

Maximum Loan-to-Value Ratio (LVR) Allowed: Typically, up to 80%, though this varies among lenders.

Interest Rates: Generally higher than standard loans, contingent on the application and lender.

Repayments: Often interest-only, and some lenders may defer interest payments until the sale/refinance of the original property.

Standard Home Loan

Purpose: Designed for purchasing a new property, supported by a deposit or equity from another property.

Maximum Loan-to-Value Ratio (LVR) Allowed: Usually up to 95% with the inclusion of lender's mortgage insurance.

Interest Rates: Typically, lower than bridging loan rates, with variations based on LVR and other factors.

Repayments: Offers the option of interest-only for a set period, but most borrowers pay off both principal and interest throughout the loan term.

Why should you choose Broc Finance?

In a short tenure, Broc Finance has helped Australian businesses, especially the SMEs to secure diverse financing options and facilitate the same via credible lenders. We have a robust network that comprises the top lenders in the country. Our accessibility to varied business loans makes it easy for businesses to get the kind of financing that’s best suited for them.

Tailor made options

Being a small business owner, many of our clients are not sure of right loan product for their businesses. Our lending specialists understand their needs and recommend tailor made options.

Personal Consultation

Unlike business loan marketplace websites which use AI based algorithms to match your requirements, we provide obligation free personal consultation as every business is different and an AI based algorithm may not provide them the optimum solution.

Competitive Pricing

We endeavour to achieve the optimum business loan solution for our clients at the most competitive pricing possible.

Clear communication

We understand the essence of time so don’t believe in wasting our customers time by giving false hopes. Transparent and clear communication is in our DNA.

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Niteesha Nagowah

We had an incredible experience working with Saroj from Broc Finance. He is incredibly knowledgeable, responsive, and guided us through the purchase of our company vehicle with expertise. The attention to detail and commitment to finding the best possible options truly set him apart. Highly recommend his services for anyone navigating the complexities of obtaining a finance. Thank you again for outstanding assistance.

Manpreet Kaur

Our sincere thanks to Saroj ji & his team for their invaluable assistance in securing the loan. We are extremely greatful for his exceptional service & support throughout the process. Highly recommend!

Matthew

Broc Finance were awesome…really responsive and solutions focussed. We especially appreciated having a broker who was an advocate for our interests when engaging with lenders.

Ibrahim Alpay

Saroj and his team is amazing have been using him for business funding for over a year he has found surprising solutions when others couldn’t make it happen very skill full with negotiating high loan amounts that I would never expect at wonderful terms and rates look no further I recommend broc finance for your business lending purposes look no further and don’t think twice much appreciated won’t go to any other broker at all many thanks to his team !!!!!!

vishal srivastava

We have used Broc Finance over last 2 years for various business line of credits and vehicle loan. Broc finance have been very professional in this journey. They have understood our needs as business and catered the solutions as per requirement . They look around in market and get one the best financial solution for the business be at vehicle of line of credits . I would strongly recommend the business for there services

Nasir sabiry

Thank you very much in helping me with financing a car SAS. You have been very professional and responsive every time I needed information. Fully recommend to any looking to finance a car.

Tajinder Kumar

For those seeking a trustworthy and dependable financial broker, I would like to recommend Broc Finance. While their fees may be slightly higher compared to other brokers, I found that their personalized approach made it worth it. Broc Finance took the time to understand my specific needs and goals and tailored their services accordingly. Additionally, their prompt availability to answer any questions or concerns was greatly appreciated. Overall, if you're in search of comprehensive and professional financial advice, Broc Finance is an excellent option to consider.

Ajay Kanumuri

I would strongly recommend. Saroj Shah helped to get my loan with in span of three days. He was very supportive and clearly explained the loan process.

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Frequently asked questions

Approval times can vary, but Bridging Finance are often known for their quick processing. Some lenders may provide approvals within a few days.

Properties with sufficient equity are typically eligible. This can include residential, commercial, or industrial properties. The amount you can borrow may depend on the property's value and your ability to repay the loan.

Interest rates on bridging loans are generally higher than standard mortgages due to the short-term nature and higher risk. Rates can vary widely based on the lender, the borrower’s credit profile, and the specifics of the loan.

Bridging loans can be arranged quickly, often within a few days to a few weeks, depending on the lender and the complexity of the application.

An exit strategy is a plan for how you will repay the bridging loan. Common exit strategies include selling a property, securing long-term financing, or using other financial resources to pay off the loan.

Yes, there are typically several fees associated with bridging loans, including arrangement fees, valuation fees, legal fees, brokerage and exit fees. These can add to the overall cost of the loan.

If you cannot repay the loan on time, the lender may charge additional interest and fees, and ultimately, they may repossess and sell the property used as collateral to recover the loan amount.

It may be possible to get a bridging loan with bad credit, as lenders often focus more on the value of the collateral and the exit strategy. However, having bad credit may result in higher interest rates and fees.

Bridging loans are typically repaid in one lump sum at the end of the term, which may include the principal amount plus any accrued interest and fees. The repayment is often made through the sale of an asset or securing long-term financing.

Yes, bridging loans can be used for business purposes, such as covering short-term cash flow needs, financing business expansion, or purchasing commercial property.