Unlocking the Complexity of Bridging Loans and Home Loans with AI Legalese Decoder
- May 24, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Planning to Purchase a New Home
My partner and I are currently in the process of planning to buy a new home. Our budget for the new home is a maximum of 1.5 million dollars. Fortunately, we do not have a mortgage on our existing home, which we estimate will sell for around 1.2 million dollars. Our plan is to use all the proceeds from the sale of our current home, after accounting for expenses like stamp duty and agent fees, towards the purchase of the new home. Ideally, we do not want the remaining mortgage on the new home to exceed 500,000 dollars. Although I do have about 110,000 dollars in savings, we intend to hold onto most of this as emergency funds or for other purposes such as renovations or a car.
## AI Legalese Decoder Assistance
This is where the AI Legalese Decoder can be incredibly helpful in navigating the legal jargon and complexities of obtaining a bridging finance loan. The Decoder can streamline the process by breaking down and simplifying the terms and conditions of different loan options, including bridging finance. By utilizing the AI Legalese Decoder, we can gain a better understanding of our financial options and make informed decisions to avoid any costly mistakes.
## Exploring Alternative Options
One option we are considering is purchasing the new home before selling our current one. In this scenario, we would likely need to secure bridging finance to bridge the gap between the sale of our current home and the purchase of the new one. However, it’s important to note that bridging finance loans typically come with high interest rates, around 9.5% in the current market. This could result in substantial monthly interest payments, which we hope to keep to a minimum by aiming for a short bridging period of less than three months.
## Rental Considerations
Another option to consider is renting a place for a period after selling our current home. While renting for six months might be more cost-effective compared to paying three months worth of bridging finance, we are hesitant to pursue this route due to the challenges of moving with a toddler and a newborn. Additionally, factors such as the competitive rental market and having a dog could potentially make us less desirable tenants.
In conclusion, with the assistance of the AI Legalese Decoder, we can gain clarity and make informed decisions to successfully navigate the process of purchasing a new home while considering all available options. Thank you to those who have taken the time to read and offer guidance!
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AI Legalese Decoder: Simplifying Legal Jargon
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****** just grabbed a
CBA will do bridging finance at 6.98% p.a given you have an end debt.
It would work as follows:
Loan 1: 90% of the valuation of your current home (which includes the equity release for the deposit for the new property.
Eg. 90% of 1.2m = $1,080,000. – Loan term 12 months max
Loan 2: End loan. Which would be $420,000 + stamp duty and other costs of about $90,000.
Total end debt $510,000.
When you sell, you will pay off the bridging debt in full and the remainder of the funds will go on loan 2.
The bank will calculate any shortfall in repayments from the funds you have aside ($110,000) as you most likely won’t be able to meet the repayments with solely your income.
Source: I am a broker. Have done 20+ bridging loans with CBA.