Private lending › Bridging finance
Bridging finance
in Australia.
Buy the next property before the current one settles. A bridging loan covers the gap so a sale date, not the deal, stops dictating your timing.
Get indicative terms
Same day, in writing. No credit check to enquire.
The basics
What is bridging finance?
Bridging finance is a short-term loan that covers the period between buying one property and selling another. It is secured against one or both properties and repaid when the outgoing sale settles.
The problem it solves is a timing mismatch, not a shortage of money. Plenty of people have more than enough equity to buy the next place, but it is locked inside a property that has not sold yet. Without a bridge you either sell first and rent in between, or you make an offer subject to sale and watch the vendor take a cleaner bid.
Because the exit is a sale rather than income, bridging lenders care far more about the value of both properties and how realistic the sale price is than about how much you earn. That is why a bridge can be assessed and settled in a fraction of the time a full refinance would take.
Mechanics
How bridging finance works
- Peak debt is calculatedYour existing mortgage, plus the new purchase price, plus costs. That total is the peak debt the lender is exposed to.
- Security is taken over both propertiesUsually a mortgage over the outgoing property and the incoming one, which is what keeps the LVR manageable.
- Interest is often capitalisedRather than making repayments during the bridge, interest accrues onto the loan and is cleared at settlement. Confirm this per lender, it is not universal.
- The sale settles and repays itProceeds clear the bridge and the peak debt reduces to the end debt, which is whatever remains against the new property.
Worked example
Illustrative only. Peak debt, end debt and maximum term all depend on valuation, the strength of the sale evidence and lender assessment.
When it fits
Why people bridge
The right property came up early
Markets do not wait for your settlement date. A bridge lets you transact on the property you actually want rather than the one that happens to align.
Selling first would cost you more
Two moves, storage and a rental in between is rarely cheaper than a few months of bridging interest once you count it honestly.
A subject-to-sale offer is weakening your position
Vendors discount conditional offers. Removing the condition can be worth more than the finance costs.
Renovating before sale
Bridging can fund the works that lift the outgoing property's price, repaid from the improved sale result.
When not to
If the outgoing property is not genuinely saleable at the price the numbers assume, a bridge turns a timing problem into a solvency one. We will look at recent comparable sales before agreeing the exit, and say so if we think the assumption is optimistic.
Terms
Bridging parameters
Priced against combined LVR across both securities, the quality of the sale evidence and how long the bridge needs to run. Metropolitan residential on a short bridge sits at the bottom of the range.
| Rates | From 7.99% p.a. |
|---|---|
| Establishment fee | From 0.75% |
| Term | 3 – 12 months typically |
| Maximum LVR | Up to 80% |
| Loan size | From $200,000 |
| Locations | All of Australia |
| Indicative terms | Same day |
FAQ
Frequently asked questions
What is bridging finance?
Bridging finance is a short-term loan covering the gap between buying one property and selling another. It is secured against one or both properties and repaid from the sale proceeds when the outgoing property settles.
How does bridging finance work?
The lender calculates peak debt, being your existing mortgage plus the new purchase and costs, and takes security over both properties. Interest is often capitalised rather than repaid monthly. When the outgoing property sells, the proceeds clear the bridge and you are left with the end debt against the new property.
How much does bridging finance cost?
Rates through our panel start from 7.99% p.a. with an establishment fee from 0.75%. Because most bridges run three to twelve months, judge the cost as a total dollar figure over the term rather than comparing the annual rate to a standard mortgage.
How long does bridging finance take?
Indicative terms the same day. Settlement depends on valuations for both properties and, where an existing lender is involved, their consent. A straightforward bridge typically moves considerably faster than a full refinance.
Is bridging finance a good idea?
It is a good tool for a defined timing gap with a credible sale at the end of it. It is a poor substitute for a property that will not sell. The deciding question is whether the outgoing property is genuinely saleable at the price your numbers assume.
Do I need to make repayments during the bridge?
Often not. Many bridging facilities capitalise interest onto the loan so nothing is payable until settlement, which matters if you are carrying two mortgages on paper. This varies by lender and is confirmed in the letter of offer.
What happens if the property does not sell in time?
Extensions are usually possible but are repriced, and the lender will want to see the sale strategy has changed. This is the single biggest risk in bridging, which is why we test the exit before placing the loan rather than after.
Enquire
Work out whether a bridge stacks up.
Tell us both properties and the timing. Indicative terms the same day, no credit check to get a quote.
Prefer to talk it through? Call 0478 715 429.