Home › Services › Bridging Loan
Bridging Loans
Bridging Finance — Buy Before You Sell
Found the property you want but haven’t sold your current home yet? A bridging loan covers the gap between purchase and sale — but timing and structure are critical. We help you manage the moving parts with confidence.
Overview
How a Bridging Loan Works
A bridging loan is a short-term facility — typically up to 6 or 12 months — that lets you finance the purchase of a new home before the proceeds from selling your current home are available. The loan effectively bridges the gap between the two settlements.
Most bridging loans are structured as ‘peak debt’ / ‘end debt’ arrangements. Peak debt is the total amount you owe during the bridging period (your existing loan + your new purchase + bridging interest). End debt is what’s left after your current home sells and the proceeds are applied — typically a normal home loan against your new property.
During the bridging period, interest is usually capitalised (added to the loan balance) rather than paid out of cash flow. This avoids you having to service two mortgages at the same time, but it does mean the loan balance grows month-on-month until the sale completes.
The two big risks with bridging are: the sale taking longer than expected (making the bridging period more expensive than anticipated) and the sale price coming in below estimate (leaving you with more end debt than your serviceability supports). We model both scenarios upfront so you understand the risk.
Key Features & Benefits
What Bridging Loans Can Do
Buy Before You Sell
The core use case — secure your new home now, sell your existing home over the next 6–12 months without the pressure of a forced sale.
Avoid Renting Between
Move directly from your current home to your new home, without a temporary rental period or storage of furniture.
Capitalised Interest
Interest accrued during the bridging period is added to the loan balance rather than paid monthly, so you don’t have to service two mortgages from cash flow.
6–12 Month Terms
Standard bridging terms are 6 months (with the option to extend to 12 in many cases). Longer terms are available from some lenders for specific scenarios.
Closed & Open Bridging
Closed bridging — your existing home has already sold under contract. Open bridging — your existing home isn’t yet under contract. Both are available but at different LVRs and rates.
End Debt Refinance
Once your current home sells and proceeds are applied, the remaining end debt converts to a normal residential loan against your new property. We arrange this transition seamlessly.
Is This Right for You?
Is a Bridging Loan Right for You?
The Process
Bridging Loan Process
Initial Assessment
We work out your peak debt, your projected end debt, the bridging interest cost over an expected 3, 6 and 12-month sale period, and the realistic LVR your situation supports.
Sale Strategy Discussion
Bridging works best when you and your selling agent are aligned on price, marketing strategy and acceptable sale timing. We talk this through before applying.
Pre-Approval
We obtain bridging pre-approval, including the lender’s view on your current home’s value (sometimes by automated valuation, sometimes by full valuation).
New Purchase Settlement
The new property settles. Peak debt is drawn. The bridging clock starts. You move in.
Sale & End Debt Conversion
Your current home sells. Proceeds are applied to the bridging loan. The remaining end debt converts to a normal home loan against your new property. We arrange the rate and product.
FAQ
Bridging Loan Questions
How much does bridging cost?
The interest rate on bridging is typically slightly higher than a standard variable rate — often 0.30%–0.80% above. The main cost, however, is total interest paid over the bridging period: on a $500k peak debt, six months of bridging at 7% costs roughly $17,500 in interest (capitalised). Plus standard application, valuation and legal fees on both the bridging facility and the end debt loan.
Do I have to make repayments during the bridging period?
In most cases no — interest is capitalised (added to the loan balance) rather than paid from cash flow. This avoids the pain of servicing two mortgages simultaneously. The trade-off is that your loan balance grows each month until the sale settles.
What happens if my home doesn’t sell within the bridging period?
Most lenders allow extensions, sometimes with a slightly higher rate or fees, if you’re genuinely close to selling. The bigger risk is that if the sale price comes in well below your estimate, the end debt may exceed your serviceability — in which case the lender may require partial repayment from other resources. We model these scenarios upfront.
Can I do bridging if I’m self-employed?
Yes — bridging is available to self-employed borrowers, both full doc and alt doc. The lender pool is slightly smaller and pricing slightly higher than for PAYG bridging, but it’s widely available.
What’s the difference between open and closed bridging?
Closed bridging — your existing home is already under contract with a confirmed settlement date. Lenders price this favourably because the exit is certain. Open bridging — your existing home is not yet under contract, so the exit timing is uncertain. Open bridging is more expensive and typically capped at lower LVRs.
Talk Through Your Bridging Plan
Free consultation. Tell us about your current home, your target new home and your sale timing. We’ll model the peak debt, the cost and the realistic options before you commit.
Get a Free Consultation