“Buy first, sell later” home loan models are on the rise

  • Buy-first, sell-then mortgage models include the use of bridge loans
  • A bridge loan is a short-term loan that can be used by a borrower until permanent funding is secured.
  • Bridge loan specialist has received over $1 billion in loan applications since launching last year

With many buyers still shut out of the market, homeowners are now turning to different financing solutions not offered by traditional lenders.

Despite this year’s slowdown, property prices have risen 11.2% nationwide over the past 12 months, with a higher rate in capital cities.

Many older Australians capitalized on this growth and profited from the boom. Many of these downsizers are typically baby boomers, taking advantage of alternative financing options.

One such option is the “buy first, sell later” mortgage model, which involves the use of bridge loans.

Often homeowners miss out on their ideal home due to the traditional slow approval process or lack of funds for a deposit. This is when the bridging loan came into play.

A bridge loan is a short-term loan until an individual (or business) obtains permanent financing or pays off an existing obligation.

One such vendor is Bridgit, a local technology-focused bridge specialist. In less than 12 months since its launch, Bridgit has reached $1 billion in loan requests.

The average loan size is $1 million, with the majority of customers in Sydney, Melbourne and Brisbane.

Mortgage broker Nick Jacobs and financial markets specialist Aaron Bassin created Bridgit in mid-2021 after seeing a gap in the market that provided quick home financing solutions while avoiding a time-consuming monthly process.

Alongside the billion-dollar milestone, Bridgit has been on a growth trajectory since launch, having raised $13.2 million in equity and secured $100 million in venture debt funding.

“We are extremely pleased to have reached $1 billion in loan applications, a milestone which gives us confidence that our product is helping Australians make the most of real estate opportunities,” said Bassin.

“Our mission has always been to challenge the traditional lending model and provide Australians with a new solution that really helps them move forward.

“Our customers have loved the flexibility of being able to use a fast bridging loan solution – giving them the option to buy first and offering many benefits, especially for retirees or people who want to buy on their terms without having to sell. first of all.”

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