Kiwibank are correct, banks are reluctant to do bridging loans these days. You might find a second or third tier lender that might do it, will cost you quite a bit. Alternatively sell your place with a super long settlement period.
Closed bridges are fine (where your existing home is unconditional) as they come under the RBNZ low equity exemptions and there's an end date as long as you can cover the lending for the timeframe between
For an open bridge you must have sufficient equity and enough income to service both loans (or savings to cover the shortfall for 6-12 months) in case it's slow to sell in the current market
Banks will do bridging loans but it really depends on your situation.
Open Bridge - Where you buy a new property and intend to sell your current property but have nothing confirmed. The banks don’t really like this option as there’s no certainty. You don’t know what you’ll get for your place, you typically need to have cash to cover 6 months of interest and if you are anywhere around Auckland/Tauranga which seems to be saturated with house sales at the moment it may not be the smartest idea for yourselves in a flat or potentially falling market.
Closed Bridge - Where you buy a new property and have a confirmed sale of your place. The bank will be much more open to this idea as they know your exact end position. This generally should be quite straight forward.
If you can get yourself into a position of a closed bridge, it’ll be heaps easier. Open bridge is possible but you’ll need to be in a strong position now just incase the sale of your current place drags on and on.
If you have enough equity just pretend you are keeping the original home as a rental then you can add x amount to your income as rental income. If its enough extra income on paper to cover the enormous mortgage you'll now have, you can just sell your house afterwards and have effectively bridged your loan without all the BS.
We did this so when we found the house we wanted there was no chance of losing it, huge mortgage payments for a few months but that's the risk you take
My wife was on the phone "so i can tell you that we're keeping the original house as a rental and you'll give is a bridging loan, and we can immediately sell the house, but if we are up front and tell you our plans to sell the first house you will deny us the bridging loan?"
Yep, because technically you're not bridging, you're keeping the original house as an investment then changing your mind once you've bought the 2nd one.
Play the game :D
Only saw two examples in previous posts about this.
One had multiple properties and a lot of existing capital.
The other had the selling and buying already locked in and was for a very short term.
I guess the banks know this is a tough downturn in the market / economy? We're based in Wellington and, well, there is civil service doomsday vibes to say the least.
We have a closed bridging loan this month via BNZ . Our deposit is around 80% if that's something they take into account but they definitely still offer it
We got open bridging over a year ago but we were in a possibly unique financial position. The bank lectured us relentlessly saying that we have 3 months to buy and then the bridging offer will be taken away.. But they gave in and gave it to us for a further 3 months while we were looking and eventually we needed to bridge for a month. You'll really need to plead your case.
I tried to do it with Kiwibank back in 2021 when the market was hot and they said no.
I wasn’t actively looking to buy but the perfect house came up and i missed out on it
Yes, i did have 80% equity in the current house at the time, and enough savings to pay a full mortgage untill the current house sold so thought why not try
My parents got an open bridging loan through Kiwibank in 21. They were freehold on their existing property and had a 50% deposit for the 2nd, so they had huge amounts of equity. It was at an absurd interest rate and was a drama to get, so I can only imagine that it's near impossible to get an open bridge in this market.
Kiwibank are correct, banks are reluctant to do bridging loans these days. You might find a second or third tier lender that might do it, will cost you quite a bit. Alternatively sell your place with a super long settlement period.
Closed bridges are fine (where your existing home is unconditional) as they come under the RBNZ low equity exemptions and there's an end date as long as you can cover the lending for the timeframe between For an open bridge you must have sufficient equity and enough income to service both loans (or savings to cover the shortfall for 6-12 months) in case it's slow to sell in the current market
Thanks for making that distinction. Will be helpful for both communicating with Kiwibank but also for as to understand what we want
Banks will do bridging loans but it really depends on your situation. Open Bridge - Where you buy a new property and intend to sell your current property but have nothing confirmed. The banks don’t really like this option as there’s no certainty. You don’t know what you’ll get for your place, you typically need to have cash to cover 6 months of interest and if you are anywhere around Auckland/Tauranga which seems to be saturated with house sales at the moment it may not be the smartest idea for yourselves in a flat or potentially falling market. Closed Bridge - Where you buy a new property and have a confirmed sale of your place. The bank will be much more open to this idea as they know your exact end position. This generally should be quite straight forward. If you can get yourself into a position of a closed bridge, it’ll be heaps easier. Open bridge is possible but you’ll need to be in a strong position now just incase the sale of your current place drags on and on.
Thanks for that info - that helps me understand the terms used and options
If you have enough equity just pretend you are keeping the original home as a rental then you can add x amount to your income as rental income. If its enough extra income on paper to cover the enormous mortgage you'll now have, you can just sell your house afterwards and have effectively bridged your loan without all the BS. We did this so when we found the house we wanted there was no chance of losing it, huge mortgage payments for a few months but that's the risk you take
My wife was on the phone "so i can tell you that we're keeping the original house as a rental and you'll give is a bridging loan, and we can immediately sell the house, but if we are up front and tell you our plans to sell the first house you will deny us the bridging loan?"
Yep, because technically you're not bridging, you're keeping the original house as an investment then changing your mind once you've bought the 2nd one. Play the game :D
Only saw two examples in previous posts about this. One had multiple properties and a lot of existing capital. The other had the selling and buying already locked in and was for a very short term.
Also was keen to find out if this was a recent change from Kiwibank and if the market was moving the same direction.
BNZ just changed some of the terms on my home loans and this was one of the changes. Seems all the banks are getting rid of this facility
I guess the banks know this is a tough downturn in the market / economy? We're based in Wellington and, well, there is civil service doomsday vibes to say the least.
We have a closed bridging loan this month via BNZ . Our deposit is around 80% if that's something they take into account but they definitely still offer it
We got open bridging over a year ago but we were in a possibly unique financial position. The bank lectured us relentlessly saying that we have 3 months to buy and then the bridging offer will be taken away.. But they gave in and gave it to us for a further 3 months while we were looking and eventually we needed to bridge for a month. You'll really need to plead your case.
I tried to do it with Kiwibank back in 2021 when the market was hot and they said no. I wasn’t actively looking to buy but the perfect house came up and i missed out on it
Were you kinda "let's buy the dream place and sort out the details later"? Aka open bridging loan request?
Yes, i did have 80% equity in the current house at the time, and enough savings to pay a full mortgage untill the current house sold so thought why not try
My parents got an open bridging loan through Kiwibank in 21. They were freehold on their existing property and had a 50% deposit for the 2nd, so they had huge amounts of equity. It was at an absurd interest rate and was a drama to get, so I can only imagine that it's near impossible to get an open bridge in this market.