Jacqueline Barton

In a fast-moving property market, timing is everything. You may find your dream home before selling your current one, but without the right financial solution, you could miss out. That’s where a bridging loan can help.

A bridging loan allows you to buy your next home before selling your current property, giving you the financial flexibility to secure your next home, potentially avoid unnecessary costs, and sell on your own terms. Here’s a quick guide to how bridging loans work and how they can benefit you.

What is a Bridging Loan?

A bridging loan is a short-term loan that helps you secure a new property before selling your existing home. It bridges the gap between buying and selling, so you can move forward without delays.

Here’s how it works:

• The loan covers the purchase price of your new home, your current mortgage balance, and any additional costs (like stamp duty).
• Interest is often added to the loan amount, with options for no monthly repayments during the bridging period.
• Once your current home sells, the proceeds are used to repay the bridging loan.

This means you can buy first, sell later, and take your time to get the best price for your current property.

Key benefits of a Bridging Loan

1. Buy first, sell later
   A bridging loan lets you secure your next home without waiting to sell. This gives you more control and flexibility over both transactions, helping you avoid rushed decisions.
2. Avoid temporary living costs
   Selling first often means moving into short-term accommodation while waiting to buy. A bridging loan allows you to move directly into your new home, saving you the hassle and expense of renting or moving twice.
3. Maximise your sale price
   You can tap into your home’s equity to make value-adding renovations before selling, boosting its appeal and potential sale price. Plus, with no rush to sell, you can time the market to your advantage.
4. Act quickly in a competitive market
   Found your dream home but haven’t sold yet? A bridging loan gives you the freedom to act fast, ensuring you don’t miss out on the right opportunity.
5. Flexibility with settlements
   Coordinating the sale and purchase of two properties can be tricky. A bridging loan lets you handle each transaction at your own pace, allowing you to streamline the process and helps you avoid penalties from delayed settlements.

Is a Bridging Loan right for you?

A bridging loan might be a good fit if you:

• Want to upsize or downsize without the pressure of selling first
• Need flexibility to buy and sell on your own timeline
• Want to avoid renting or moving twice
• Plan to renovate your current home to increase its value
• Found the perfect home and need to act fast

The new year is all about fresh starts. With 2025 fast approaching, it’s the perfect time to reflect on your finances and take steps to set yourself up for success. The holiday season may bring extra expenses, but it’s also an opportunity to start building better financial habits for the year ahead.

Here’s how to review, reset, and prepare for a financially confident 2025:

Look back to move forward

The first step in shaping your financial future is understanding where you stand today. Take a moment to ask yourself:

• How much have you saved this year?
  If you had savings goals but didn’t meet them, don’t worry – this is your chance to learn and reset.
  If you didn’t set any goals, note how much you’ve saved and use that as your starting point for next year.
• Where has your money gone?
  Review your bank statements or use your banking app to spot trends.
  Are there subscriptions you no longer use? Or dining-out habits that could be trimmed? Spotting these patterns can highlight where you can adjust and save more effectively.

Set clear, achievable goals

Once you’ve reviewed your progress, it’s time to plan for what’s next. What do you want to achieve in 2025?

Here are a few ideas to get you started:

• Build an emergency fund for unexpected expenses.
• Plan to pay down debt, like credit cards or personal loans.
• Save for a home deposit or future investment property.
• Budget for home renovations or upgrades.

Break your goals into smaller, manageable steps. For example, if you’re saving $10,000 for a home deposit, aim to set aside $200 a week. Small wins will keep you motivated.

Start small, think big

Building better financial habits starts with practical, daily actions. Take a moment to ask yourself: “What small change will I commit to this week?”

Here are a few to consider:

• Cook at home more instead of dining out to help you manage your budget efficiently.
• Use cash for discretionary spending by withdrawing a set amount each week. Once it’s gone, it’s gone! This method encourages you to stick to your budget.
• Keep track of your expenses with apps like Frollo or Moneytree to monitor where your money goes.
• Make it a habit to review your account balances and transactions weekly. This keeps you informed about your finances and helps catch any unauthorised charges early.
• Before making any non-essential purchases, try waiting 24 hours. Giving yourself time helps clarify whether the purchase is necessary.
• Set up automatic transfers to your savings account after payday to prioritise saving.
• Check out tools like MoneySmart’s Budget Planner or Simple Money Manager to help manage your budget effectively.

By committing to just one small change this week, you’ll take meaningful steps toward building better financial habits for the long term.

Stay on top of your financial commitments

• Monitor your interest rates
  Interest rates can change over time, so it’s a good idea to regularly review your mortgage or loans to ensure they continue to suit your financial situation.
• Consider extra repayments
  If your budget allows, even small extra repayments on your mortgage or loans can help reduce the overall amount you pay and shorten the repayment period.
• Explore refinancing options
  If your circumstances have changed, let’s take a closer look at your home loan. Refinancing might provide options that better align with your current needs.

Make habits count in 2025

Building better financial habits starts with small, consistent steps. Whether it’s saving, reviewing your spending, or creating a clear plan, each action brings you closer to your goals.

If your 2025 goals include buying a home, refinancing, or planning your next property move, I’m here to support you. Let’s work together to make it happen. Contact me today to get started!

Can you believe the year is almost over?

With the end of 2024 fast approaching, it’s time to take a look at the highlights reel of what happened in the property world this year and what’s in store for 2025.

Reflecting on 2024

Interest rates remained flat

The Reserve Bank of Australia (RBA) kept the cash rate steady in 2024 at 4.35%.

Inflation has fallen substantially since the peak in 2022. Headline inflation was 2.8 per cent over the year to the September quarter, but underlying inflation (as represented by the trimmed mean) remains a concern for the RBA.

Over the year to the September quarter, it was 3.5 per cent, which means it’s still some way from the 2.5 per cent midpoint of the RBA’s inflation target. The RBA doesn’t expect inflation to return sustainably to the midpoint of the target until 2026.

In other news, this year we saw a shake-up of the RBA. One big change was that there were only eight cash rate decisions (instead of 11), following a recommendation of the Review of the Reserve Bank in March 2023. Another recommendation was that monetary policy processes be more transparent, with press conferences after each meeting.

Property prices continued to climb, but the market is cooling

Australia’s property prices continued to rise in 2024, but the pace of growth slowed down.

November marked the 22nd consecutive month of property price growth across the country, but the rise was modest, at 0.1%. It was the weakest Australia-wide result since January 2023, and could signal the end of rising house prices, experts say.

Perth was the standout in terms of property price growth in 2024. The year-on-year change was 21%.

Adelaide and Brisbane also performed strongly, with a year-on-year change of 14% and 12.1% respectively. Sydney had more modest gains of 3.3%.

Melbourne saw property prices decline -2.3% year-on-year, while prices were fairly flat in Hobart (1%), Darwin (0.9%), and Canberra (-0.1%).

Rental growth slowed

Following a period of exceptional rental growth, Australia’s rental surge cooled in many markets, as rental demand eased.

Annual rent increases for houses hit multi-year lows in Sydney, Melbourne, Brisbane, Perth, and Adelaide in the September quarter, indicating a relentless stretch of rising rents may have peaked.

Sydney recorded its weakest growth rate for rental houses for a September quarter in four years, with annual gains at their lowest in almost three years. That said, the average weekly rent was still at a record high of $775.

Melbourne house rents saw the weakest figures for a September quarter since 2021, while rents in Brisbane declined for the first time in just over four years.

The slowed rental growth was attributed to decreased demand, with more people opting for shared housing and intergenerational living, and overseas migration down.

Meanwhile, Darwin and Hobart experienced their strongest September quarter for rental growth since 2020 and 2017, respectively.

Government incentives were announced

There were several announcements in the May Federal Budget aimed at helping aspiring homeowners to enter the market.

The government allocated $5.5 billion towards its shared equity Help to Buy Scheme in 2024-25 for those on low and moderate incomes. Under the scheme, the government would provide an equity contribution of up to 40% of the purchase price for new homes and 30% of the price of existing homes. The bill was passed into law by parliament last month.

The government also increased its line of credit to Housing Australia by $3 billion, and Housing Australia’s liability cap by $2.5 billion. Housing Australia administers the Home Guarantee Scheme, which encompasses the First Home Guarantee (FHBG).

Under the FHBG, part of an eligible home buyer’s home loan from a participating lender is guaranteed by Housing Australia. Homebuyers can purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance.

Other incentives designed to relieve cost-of-living pressures included a $300 energy bill rebate in the 2024-25 year.

The government’s tax cuts also came into effect. For some people, this meant their borrowing power increased.

What’s ahead in 2025

Interest rates may drop

The RBA Board will hold its first meeting of 2025 on 17-18 February. Speculation has been rife that there will be a cash rate cut in the first half of next year.

Only one of the big four banks believes the RBA will cut the cash rate in February – all of the others are banking on a cash rate cut in May.

The RBA has held firm about not cutting the cash rate until inflation is sustainably in the target range. All eyes will be on December quarter inflation data, which is due to be released at the end of January.

Property price growth may weaken

Many economists believe the deceleration in property price growth may continue in 2025.

SQM Research’s latest Boom and Bust Report forecasts that house prices in Sydney and Melbourne will decline further in 2025, while Perth is likely to experience the strongest growth of Australia’s capital cities.

The report forecasts average national housing prices will increase by between 1 and 4 per cent. This is assuming there’s no spike in inflation, population growth remains steady and there’s a mid-year interest rate cut.

The federal election could shake things up

The 2025 Australian federal election will be held on or before 17 May 2025. There’s speculation an early election will be called, so keep your eyes peeled.

The housing crisis is likely to be front and centre, so it’s worth watching those election promises closely. The Coalition has already proposed a plan to allow first home buyers and separated women to use up to $50,000 of their superannuation savings for a home deposit.

Planning a 2025 property purchase?

With interest rates expected to come down and property prices set to decline in some markets, 2025 is shaping up to be an exciting year for aspiring homeowners and investors.

If you’re planning to buy, talk to us about getting pre-approved on your finance, so that you’re ready to dive in when you find the right property.