Bridging Finance Nab

NAB, or National Australia Bank, offers bridging finance to help customers navigate the tricky period between buying a new property and selling their existing one. Bridging loans essentially “bridge” the financial gap, allowing you to purchase your next home without needing to sell your current one first.

How it Works: Imagine you’ve found your dream home, but your existing property hasn’t sold yet. A NAB bridging loan provides temporary funding, typically for a short period (usually up to 6-12 months), covering the purchase price of the new property and associated costs. This allows you to secure your new home without being rushed into selling your current one at a potentially lower price.

Key Features of NAB Bridging Finance:

• Flexibility: NAB offers different types of bridging loans, tailored to individual circumstances. This includes options for interest-only repayments during the bridging period.
• Loan Structure: The loan is typically structured as two parts: the existing mortgage on your current property and the bridging loan itself. Once your existing property sells, the proceeds are used to repay the bridging loan and potentially reduce the mortgage on your new home.
• Interest Rates: Bridging loan interest rates are generally higher than standard home loan rates. This reflects the higher risk associated with the short-term nature of the loan and the potential for property sales to be delayed. NAB will provide specific interest rate information based on your individual assessment.
• Loan-to-Value Ratio (LVR): NAB, like other lenders, will consider the LVR for both your current and new properties. A lower LVR (meaning you have a larger deposit or equity) generally results in more favorable terms.
• Valuations: Independent valuations of both your current and new properties are required to determine the appropriate loan amount and assess risk.

Things to Consider Before Applying:

• Repayment Strategy: It’s crucial to have a clear plan for selling your existing property within the bridging period. Delaying the sale can result in higher interest costs and potential financial strain.
• Exit Strategy: Consider what happens if your property doesn’t sell within the agreed timeframe. NAB will likely require a contingency plan, such as refinancing the loan or exploring other options.
• Associated Costs: Factor in all costs associated with bridging finance, including application fees, valuation fees, legal fees, and the higher interest rates.
• Interest Capitalization: Many bridging loans capitalize the interest, meaning the interest is added to the loan balance. This can increase your overall debt and should be carefully considered.

Applying for NAB Bridging Finance: The application process involves providing detailed financial information, including income, assets, and liabilities. NAB will also assess your creditworthiness and your ability to repay the loan. Consulting with a NAB lending specialist is highly recommended to discuss your individual needs and determine the best bridging finance solution for your situation.

Disclaimer: This information is for general guidance only and does not constitute financial advice. Always consult with a qualified financial advisor and review NAB’s product disclosure statement before making any decisions regarding bridging finance.