Guide to Bridging Loans for Apartment Purchases

What is Bridging Finance?

Bridging finance is a short term loan that helps you purchase your next property before selling your current home. For WA Government employees looking to upgrade to an apartment, this temporary finance solution provides the funds you need to secure your new place without the pressure of selling first.

Think of it as a financial bridge between two properties. You can buy your dream home when you find it, then sell your current property in your own time. This means you won't miss out on the perfect apartment while waiting for your house to sell.

How Bridging Loans Work

When you apply for bridging finance, lenders use both your current property and your new apartment as security. Here's what typically happens:

1. You find the apartment you want to purchase
2. Submit a bridging loan application
3. The lender assesses both properties
4. You receive bridging loan approval
5. Complete bridging loan settlement on your new apartment
6. Sell your existing property
7. Use the sale proceeds for bridging loan repayment

The bridging period usually ranges from 6 month bridging to 12 month bridging, depending on how long you need to sell your current home. This short term property finance gives you breathing room to avoid selling first and rushing the process.

Understanding Bridging Finance Costs

Like any financial product, bridging loans come with costs you should know about. The bridging loan interest rate is typically higher than standard home loans because of the temporary nature and increased risk for lenders.

Common bridging finance costs include:

• Interest on the bridging loan amount (often capitalised)
• Bridging loan fees for establishment and administration
• Valuation fees for both properties
• Legal and settlement costs
• Monthly service fees during the bridging loan term

Many lenders offer capitalised interest, meaning the interest charges are added to your loan balance rather than requiring monthly payments. This interest capitalisation helps your cash flow during the temporary finance period.

Bridging Loan Security and LVR Requirements

Lenders assess your bridging loan security carefully. They'll look at your bridging loan LVR (loan to value ratio) across both properties. Most lenders want to see a combined LVR below 80% to approve your application without additional insurance.

For example, if your current property is worth $600,000 with a $200,000 mortgage, and you're buying an apartment for $700,000, the lender calculates your total borrowing against both property values.

As a WA Government employee, you may have access to special lending terms through Public Home Loans. We work with banks and lenders across Australia who understand the stability of public sector employment.

Benefits of Using Bridging Finance

Choosing to buy before you sell offers several advantages:

• Seamless property upgrade: Move directly from your old home to your new apartment
• No rushed sales: Take time to achieve the right price for your property
• Auction finance: Compete confidently at apartment auctions
• Market opportunities: Act quickly when you find your ideal property
• Avoid temporary accommodation: No need for short-term rental between properties

This buying before selling approach particularly suits WA Government employees with stable employment, as lenders view your income reliability favourably.

Bridging Loan Risks to Consider

While bridging finance provides flexibility, it's important to understand the potential challenges:

• Your current property might take longer to sell than expected
• Property values could change during the bridging period
• You're carrying two properties temporarily, which affects your finances
• The bridging loan interest rate is higher than standard variable interest rate loans
• You need a clear exit strategy for repayment

Your exit strategy typically involves selling your existing property. Before applying, ensure your current home is realistically priced and marketable. Some borrowers also consider refinancing once they've sold, which could provide better interest rate discounts.

The Application Process

Submitting a bridging finance application requires thorough documentation. You'll need:

• Exchange contract for your new apartment purchase
• Current mortgage statements
• Property valuations for both homes
• Proof of income and employment
• Evidence of your capacity to service both loans temporarily

Public sector employees often receive faster approval because lenders recognise the job security that comes with government employment. We can help you access loan options from banks and lenders across Australia who specialise in lending to public servants.

At Public Home Loans, we understand the specific needs of WA Government employees. Our team knows which lenders offer the most suitable bridging loan terms for your situation.

Bridging Loan Alternatives

If bridging finance doesn't suit your circumstances, consider these options:

• Equity release: Access equity from your current property to use as a deposit
• Family assistance: Guarantor arrangements with family members
• Selling first: Although less convenient, this avoids bridging finance costs
• Extended settlement: Negotiate a longer settlement period with the vendor

You might also explore options through our equity release loans service if you have sufficient equity available.

Making the Right Choice

Bridging finance works well when you have:

• Strong equity in your current property
• Stable employment (like WA Government positions)
• A realistic timeline to sell
• A marketable existing property
• Sufficient income to cover temporary costs

Before committing to a bridge loan, consider getting a loan health check to understand your full financial position. This helps ensure the bridging loan amount and terms suit your circumstances.

Working with Specialists

Navigating bridging finance requires expertise. The right broker can:

• Compare urgent finance options across multiple lenders
• Negotiate better loan interest rate terms
• Structure your loans to minimise costs
• Ensure quick bridging finance approval when you need to act fast
• Guide you through bridging loan refinance options after settlement

Public Home Loans specialises in working with government employees. We understand your employment benefits and can leverage these with lenders who value public sector stability. Whether you're buying your next home or exploring your options, we're here to help.

Bridging loans provide the financial flexibility to buy before sell, giving you control over your property journey. With the right planning and professional guidance, you can move into your new apartment without the stress of coordinating simultaneous settlements.

Ready to explore bridging finance options for your apartment purchase? Call one of our team or book an appointment at a time that works for you. We'll assess your situation and help you access the right loan options for your move.