How bridging works in Queensland
A bridging loan funds a new purchase while you still own your existing property. The lender usually registers mortgages over both properties in Queensland's titles registry. While you own both, your total borrowing is the peak debt. After your old property sells, the proceeds reduce the loan to the end debt on your new home.
Banks generally want proof that you can repay the end debt from your income. Private lenders tend to rely more on property values and your sale plan, which can help where income evidence is limited, at a higher cost.
Transfer duty in Queensland
Queensland transfer duty is collected by the Queensland Revenue Office. The Queensland Revenue Office says liability usually arises on the contract date, not at settlement, and a self-assessed transaction must be lodged within 30 days of that date, so ask your conveyancer when the duty must be paid. Buyers of a home they will live in may qualify for a home concession rate, which requires moving in within 1 year of settlement, and first home buyers may have extra relief. Lenders rarely fund duty, so have the cash ready. Estimate it on the Queensland stamp duty page.
If you claim a home concession and do not move in, the concession is lost in full; if you sell within 1 year of moving in, part of it can be lost. Factor that into any plan where the timing is tight.
Selling in Brisbane, the coasts and the regions
Your main risk is a slower or cheaper sale than planned. Sale periods differ between Brisbane, the Gold Coast, the Sunshine Coast and regional cities such as Townsville and Toowoomba. Coastal and holiday markets can be seasonal. Lenders may also look harder at properties in areas exposed to flooding, which can affect valuations and insurance. Allow a buffer and assume a cautious sale price.
Typical scenarios in Queensland
Example only, not a real client. A Brisbane family buy a larger home in a school catchment before listing their current house. A bridging loan funds the purchase, with transfer duty paid from savings and the old house sold within four months.
Example only, not a real client. A Sunshine Coast retiree buys a low-maintenance unit and needs to settle before the family home sells. Because their income is limited, a private lender offers short bridging finance over both properties, repaid from the sale.
Costs to compare
Ask each lender for:
- the rate during and after the bridging period;
- whether interest is added to the loan or paid monthly;
- establishment, valuation and legal fees;
- the end debt at different sale prices;
- fees for extending the term or repaying early.
Model it with the bridging calculator and compare costs with the loan cost estimator.
Land tax at 30 June
Queensland land tax is assessed on the land you own at midnight on 30 June. If you own both properties on that date, land tax may apply to the one that is not your home, depending on its land value and any exemptions. The Queensland Revenue Office lists a transitional home exemption for people who are between homes, so check whether it applies if your sale is likely to cross 30 June. See land tax in Queensland.
Other ways to buy before you sell
You could negotiate a longer settlement, make the purchase subject to your sale, or use a short-term property finance facility. Read bridging finance explained for the national picture, and compare a caveat loan in Queensland if you only need a smaller amount for a short time.
Questions for a Queensland lender
- What peak and end debt will you lend against?
- How is interest charged while I own both properties?
- Will you value a property in a flood-affected area?
- What happens if my sale has not settled by the end of the term?
- Can I repay early without a fee?
Speak to your own conveyancer or lawyer about the home concession and timing before you sign.