4 things to consider when using a bridging loan to help you relocate

Published on November 25th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Planning a move might seem straightforward in the mind. However, if you sat down and set a budget you will soon realise that moving could cost you anything between $550 to $3,500 for a removalist alone. This is where a relocation loan, also known as a bridging loan, can come in handy. Here are seven things to consider when taking out a bridging loan.

Calculating the costs

Before you even consider taking out a loan you will need to consider the costs of your move. Having a budget in place will help you know how much is needed and where you can cut down costs by doing a few things yourself. This means looking at expenses such as:

  • Hiring a mover can cost you up to $3,655
  • Renting a truck can cost you $782
  • Renting or purchasing your new apartment
  • Paying for storing and lodging

Taking out a loan you will be able to pay off

Relocating can be a bittersweet moment as this means you are starting off a new chapter in a new building you will have to adjust to. But things can soon turn bitter if you bite off more than you can chew in terms of your loan.

If you are on shoestring budget you might want to check that you will be able to comfortably afford the loans repayments. Checking to see if you will be able to pay off your loan by looking at its features such as flexibility when it comes to repayments, its ongoing costs, fees, charges, along with the APR and interest rate.

You are entering a higher pay bracket

People have various reasons for relocating and even more so when they are taking out a personal loan. It is vital that you carefully assess the reasons as to why you are taking out a personal loan to help you relocate. It might be tricky if you are just starting out, but if you are moving to a job that offers a higher pay bracket it can help you pay off your loan on time. This will also decrease your chances of falling into arrears which could end up costing you.

You can get a good interest rate

It is possible to get a competitively low rate for your personal loan if you have a good credit score and you compare your loans instead of settling for the first good deal that comes your way. If you do not have a good credit score you will not be excluded from getting a rate that is suitable for your financial situation.

Speaking to a broker or a lender about what options are available for you will help you find an option that is financially sound and flexible for you.

You don’t have to miss out on a good deal. Instead of waiting for your current property to sell you can move with ease into your new place with a bridging loan.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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