Bridging finance, for when the timing won't wait.
Bridging solves a specific problem: buying before selling. It's not a strategy and it's not cheap. Used in the right situation, it does the job cleanly.
What sits inside a bridging loan.
Six concepts to understand before you sign. Bridges are simple in shape and tricky in the detail. Worth running the borrowing capacity calculator early so you know whether the peak debt position is going to service.
Closed bridge
You've already sold the old place with an unconditional contract. The bridge funds the new purchase until that sale settles. Lower-risk for the lender.
Open bridge
Old place is on the market but unsold. Riskier, priced higher, and not every lender will write it. Term capped, usually 6 to 12 months.
Interest capitalisation
Most bridges let you capitalise interest during the bridge period, so you don't pay it month by month while the old place is selling.
Peak debt and end debt
Peak debt = old loan + new loan + costs. End debt = what's left after the old property sells. Both need to service.
Bridge term
Typically 6 months for closed bridge, up to 12 months for open. Extension is possible but rate usually steps up.
Exit strategy
Lender wants a clear plan: sale of the existing property, refinance, or other liquidity. No plan, no bridge.
How a bridge runs, end to end.
Five steps. Pace matters because the trigger for a bridge is usually a contract on the new property with a fixed settlement date. Once the bridge clears, the end debt usually settles onto a standard owner-occupied loan.
- 01Capacity and equity check
Peak debt sized against income and existing equity. We confirm a bridge will service before we recommend it.
- 02Exit strategy agreed
The sale of the old property, refinance to standard variable, or other liquidity. Lender needs to see the plan.
- 03Lender selection
Not every lender does bridging cleanly. The shortlist is smaller. We pick on policy fit and cost, in that order.
- 04Settlement of new property
Bridge funds the new purchase. Interest typically capitalises so you're not paying it monthly.
- 05Sale settles, bridge ends
Proceeds from the old sale pay down the bridge. What remains becomes the end debt, on standard variable terms.
Typical bridge numbers.
- Closed bridge term
- Usually up to 6 months
- Open bridge term
- Usually up to 12 months
- Peak debt LVR
- Typically 75% to 80%
- Rate
- At or just above standard variable
- Interest treatment
- Capitalised during bridge period
- Lender shortlist
- Smaller than standard home loans
For credit-related disclosures, see the Credit Guide.
How bridging finance works.
When the property you want to buy comes up before the one you're selling has sold, and delaying isn't an option. It's a tool for a timing problem, not a strategy. If you can sell first and rent for a few months, that's usually cheaper.
Two components. Interest at the bridge rate (typically a touch above standard variable rates) on the peak debt for the bridge period, plus the establishment costs. We model both before you commit.
That's the real risk. If you reach the end of the term and the property is still on the market, you may need to extend (more cost), accept a lower offer, or refinance into a standard loan. The plan B should be agreed before settlement, not at month 11.
Generally not without LMI. Most lenders want strong equity in either the old place or the new to write a bridge. LVR is calculated on peak debt, which can sit at 75% to 80%.
For a closed bridge, yes. For an open bridge, they'll want a marketing strategy, agent appraisal, and evidence the property is listed or about to be.
Yes. A longer settlement on the new purchase, a vendor finance arrangement, an equity release on the existing property, or simply selling first and renting briefly. We'll walk through the alternatives before recommending a bridge.
Continue reading
- Home loansWhat you're bridging to: the end debt position.
- RefinancingCommon follow-up once the bridge ends.
- Investment property loansIf the new purchase is investment, not owner-occupied.
- Finance BrokingThe pillar page covering the full broking service.
- Borrowing capacity calculatorIndicative capacity test against peak-debt scenarios.
A bridge is a tool. Use it when it fits.
A 30-minute call sizes the bridge against your equity and exit plan. Free, no paperwork to start.