Advantages

• Search for a new home with confidence, even if you haven’t settled on your existing property
• Choose between principal and interest, or interest-only repayments
• Use the proceeds from the sale of your home to reduce the balance on your bridging loan following settlement
• Make unlimited lump sum payments, depending on the terms of your finance (restrictions often apply to Fixed Rate home loans).

Disadvantages

• Many of these loans do not have the same features or flexibility as other variable loans
• Generally dont have an offset account
• The greatest risk is that your property will not sell within the bridging period which may see an increase in the interest rate charged.
• Taking a secondary debt on top of an existing mortgage means that you will have an additional interest rate cost.
• Occasionally you may have overestimated the likely sale price of your existing property, and therefore fall short of the amount required to pay out the bridging loan.