Products
Bridging Loans
What is a Bridging Loan
A bridging loan is a short-term facility that covers the financial gap between the purchase of a new property and the sale of an existing property.
It entails both:
- a bridging loan or debt of which customers must maintain during the buy and sell period up to a period of 12 months, with the loan being treated as in default if the property is not sold within 12 months of funding; and
- a post-bridging loan or debt which is the remaining loan amount outstanding (if any) after settlement of the sale proceeds from their existing property sold.
Eligibility Criteria
This product is available to customers who:
- Are living in Australia as:
- An Australian citizen, permanent resident or specified temporary Australian resident;
- A New Zealand citizen; or
- An overseas citizen co-borrowing with an Australian citizen or permanent resident; or
- Are living and working overseas as an Australian citizen or permanent resident; or
- Are an Australian registered, non-trading company; or
- Are a trustee of an Australian, non-trading, family, unit or hybrid trust (the beneficiary and Trustee must meet the eligibility criteria of an individual or a company (as above)); and
- Provide sufficient security in accordance with CBA’s credit assessment criteria, including:
- Acceptable residential mortgage for existing property and purchase property;
- Acceptable residential mortgage for existing property and purchase property, with supplementary cash held in an eligible CommBank account; and/or
- Acceptable residential mortgage for existing property and purchase property, with a guarantor who supports the loan by providing additional security;
- Acceptable residential mortgage for existing property (in limited circumstances); and
- Are an existing CommBank customer.
Customer objectives, financial situation and needs
Bridging loans are for customers who:
- Want a loan to provide funds for the purchase of a new property before they receive funds from the sale of an existing property; and
- Are in a financial situation that satisfies CBA’s credit assessment criteria, which takes into account:
- The ability to service the repayments for this loan and any ongoing loan for the new property; and
- The expected proceeds from the sale of the existing property.
Key features
- A loan term of up to 12 months with a variable interest rate.
- Access to additional funds to pay for the purchase of a new property, before funds are received from the sale of an existing property. The settlement funds from the sale of the existing property will be applied to pay down this loan.
- An Everyday Offset account can be linked to the loan account, where money deposited into the Everyday Offset account reduces the interest payable on the home.
- Unlimited repayments (including the ability to pay the loan out early) can be made without additional charge.
- Access to a redraw facility if additional repayments are made.
- Switch repayment type between principal and interest and interest only repayments.
- Pay an annual fee to access a Mortgage Advantage (MAV) Package (which is subject to its own eligibility criteria), to receive a discount on home loan interest rates as well as waiver of specified fees.
Loan features and requirements
All of the following criteria must also be met for a Bridging Loan:
| Loan Features | Requirements |
|---|---|
| Existing CommBank customer |
|
| Loan to Value Ratio (LVR) |
|
| Servicing |
|
| Security |
The Bridging Loan must have,: as security on the loan:
Please Note: Additional securities may be attributed to support an application but they cannot replace the existing and purchase properties within a bridging loan application. Vacant blocks of land are only available as a third security (additional security) to support an application and cannot be used as the primary existing security. |
| Alteration to Securities |
|
| Interest rate |
|
| Loan term |
Note: The loan will be treated as being in default if the property is not sold within 12 months of the funding date. |
| Account conduct history |
|
| Loan structure |
|
| Construction loans |
|
| Lenders' Mortgage Insurance (LMI)/Low Deposit Premiums (LDP) |
|
| Negative gearing |
|
| Additional repayments |
|
| Loan purpose |
|
| Repayment type |
|
Note: For properties that are currently leased, rental income (up to the date of the lease agreement) may be included in the servicing exercise where a formal lease agreement is in place at the time of applying for the bridging loan.
Note: If this property is to be sold the income cannot be included in the servicing of the residual debt.
Loan Options and Structure
You Must:
- Structure the Bridging loan application as two separate loans:
- Bridging loan; and
- Ongoing-Bridging or end debt loan.
- CommBank will issue separate loan contracts
- Record the loan term as 1 year for the Bridging loan, as your customer must fully repay this facility within 12 months.
Your Customer:
- Is required to sell the existing property within 12 months of the funding date, otherwise they will be in default of their contract. A signed contract for sale for the existing property is not required at the time of application.
- Must repay the Bridging loan in full.
- If they decide to keep both properties at the end of the bridging period, you must submit a new home loan application without the bridging feature.
Example
Loan 1 - Bridging loan:
- No additional interest rate discounts available, outside of standard MAV
- Maximum 1 year loan term
- Interest only payments available
- Construction loan feature can't be selected.
Loan 2 - Post-Bridging loan or end debt:
- Additional interest rate discounts available
- Maximum 30 year loan term available
- Interest only payments available
- Construction loan feature can't be selected.
The target market for this product will be found within the product’s Target Market Determination, available here