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Buy Now, Sell Later: How to Use Home Equity to Fund Your Dream Home

By George Hadgelias

If you’re on the hunt for a new home, but you haven’t sold your old one yet, you’re not alone.

Buying before selling has traditionally been seen as a back-up solution. However, more people are cottoning on to the benefits of this less conventional real estate strategy.

REA Group’s most recent Property Seeker 2020 report reveals that before 2020 one in three sellers planned to buy before they sold. With buyers eager to cash in on the rising market, that figure has jumped significantly.

The upsides to buying first

Purchasing before selling has some key benefits. First and foremost, it gives buyers control.

Taking the traditional route and selling before buying will leave you looking for a home with the pressure of a looming settlement date.

This can be an extremely stressful time — especially if you are facing the prospect of finding a temporary rental, organising utilities and removalists.

With the clock ticking, some people end up buying a property that’s not exactly what they want.

Meanwhile, when purchasing first, the pressure is off and you can take your time, explains Aaron Bassin, CEO of Bridgit, a bridging loan specialist allowing customers to buy first and then sell.

“We are seeing growing demand for this strategy of property buying and the reason is simple: customers love being able to spend the time finding the perfect next home without the added pressures that come with selling first,” Bassin says.

Another key advantage is that your home may increase in value in a rising market, netting you more money the longer you hold on to it.

How to use your equity

The good news is you don’t necessarily need to have bucket load of cash saved up to buy a second property, a common scenario for Aussie downsizers.

One option is to unlock the equity in your current home by using a bridging loan to fund the purchase.

This is a lending scenario where a a loan is secured against your property asset, essentially unlocking its value without you having to sell it, explains Bassin.

Bridgit can provide a loan amount of up to 75% of the combined value of the existing property and new property looking to be purchased,” Bassin says.

With the ‘buy now, sell later’ concept catching on, both downsizers and upsizers are increasingly seeing the advantage of this finance option to find the next perfect home, he adds.

Finding the right lender

If you want to access a bridging loan, banks and traditional lenders may not be your first port of call.

“The bridging loan had become outdated and was being underserved by the traditional lenders, with slow approvals and lack of accessibility,” says Bassin.

“That’s why we decided to make a product that is suited for the customer of today.

“At Bridgit, the process is simple: complete an application online and if eligible, receive same-day approval — so you know your borrowing power instantly.

“Once you purchase the property, you then have six months to sell your current home, three months of which are interest free.”

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