Home/Residential/Bridging loans
Bridging loans
Buy now, and sell when the price is right.
Bridging finance covers the gap between settling the new place and selling the one you're in — so the order you move in is your choice rather than the market's.
Bridging loans
Most people rule this out before they ask.
You weren't really looking. Then you were, and it's the right house, and your own place isn't even on the market. From there it looks like a choice between gambling on what your own place will fetch and watching somebody else buy the one you wanted.
I have spent twenty-one years in lending, with more than twenty-five lenders on one panel, and I handle both ends of this — the loan on the new place and what happens to the one you're leaving. You deal with me from the first phone call to the day the second settlement goes through.
The part nobody explains is which number the lender actually assesses. During the overlap you owe what's called peak debt — your existing loan, the new purchase and the costs, all at once — and it can be a frightening figure to look at. But lenders assess your ability to afford the end debt: what is left once your current place sells. Interest over the bridging period is usually added to the loan rather than paid monthly, so you are not making two repayments either. That's what makes this possible for far more people than attempt it.
Start to finish
How it works
Quick, when it needs to be — but the first conversation decides whether bridging is even the right tool.
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Is this actually a bridging job?
Thirty minutes, nothing on your credit file. Sometimes the answer is a longer settlement, or selling first and renting for a few months. I'd rather tell you that than write you a loan you didn't need.
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Both numbers, in writing
Peak debt and end debt, side by side, with a deliberately conservative figure for what your current place sells for. If the end debt only works at the optimistic sale price, you need to know that before you bid, not after.
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A lender whose terms fit your sale
Lenders differ a lot here — on how long they'll give you, whether they'll lend before you've exchanged on the sale, and what happens if the term runs out. That last one matters more than the rate.
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Two valuations, one application
Both properties get valued — the one you're buying and the one you're selling, because the lender's exposure depends on both. Your agent's appraisal is a starting point, not the number the lender will use.
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Settle, sell, and land on a normal loan
You settle the new place, move, sell at your own pace, and the proceeds clear the bridge. What's left is an ordinary home loan, and I review it with you the same as any other.
Including the ones that aren't a loan
Bridging, and the alternatives to it
Two kinds of bridging, and three ways of avoiding it. Worth knowing all five before you pick.
| Option | How it works | When it's the right call |
|---|---|---|
| Closed bridging | You've already exchanged on the sale, so the lender knows the date the money arrives and the amount. | The straightforward version. Shorter term, better pricing, and far less that can go wrong — because the main risk has already been removed. |
| Open bridging | You haven't sold yet. The lender is taking a view on a sale that hasn't happened, so terms are tighter and the cost is higher. | When the house you want won't wait. Legitimate and common, but it is the version where the alternatives below deserve a serious look first. |
| Sell first, rent, buy later | No bridge at all. You sell, move into a rental, and buy with cash in hand. | The cheapest option by a distance, and the one nobody wants to hear. You move twice and you take market risk the other way — but you buy with certainty and no deadline. |
| A longer settlement | Negotiate a longer settlement on the purchase so your sale completes inside it. Sometimes both settle on the same day. | Often the quiet answer. Costs nothing, needs a cooperative vendor, and is worth asking for before anyone arranges finance. |
| Release equity instead | Borrow against the equity in your current home for the deposit, then refinance properly once it sells. | Where there's substantial equity and no great hurry. Simpler than a bridge and usually cheaper, though it leaves you carrying two loans properly rather than capitalising the interest. |
Building the new place rather than buying it? That's on the construction loans page — and the two can run together.
Five ways this starts
The situations I see most often
| Situation | Who it suits | What I'd tell you |
|---|---|---|
| You found it before you were ready | A family who weren't actively looking | The most common one by far. The question is never whether you can bridge, it's whether the end debt works on a conservative sale price. |
| Upsizing in a market that's moving | Owners worried about selling and being locked out | A real concern, and bridging genuinely solves it. Just be honest with yourself about whether the market is moving or you'd simply rather not move twice. |
| Downsizing, with no mortgage left | Retirees and empty-nesters | Usually the easiest of all of these, because the end debt is small. Serviceability on a pension or part-time income is a different question, and worth checking early. |
| A sale that fell over | A buyer caught between two contracts | Unpleasant but not fatal. Call me the day it happens rather than the week before settlement — there is far more I can do with three weeks than with three days. |
| Buying at auction | Anyone bidding before their own place is sold | An auction contract is unconditional. Have the bridging sorted before you raise your hand, not on the Monday after. |
Straight about it
What it costs you
A bridging loan on a home you'll live in is a residential loan. The lender pays me and you pay me nothing, and that commission is disclosed to you in writing before you sign.
What the bridge itself costs
- Interest on the peak debtYou're charged on the whole amount — existing loan, new purchase and costs — for as long as the overlap lasts. It is usually capitalised rather than paid monthly, which is a relief to your cash flow and means the balance grows while you wait.
- A higher rate than a standard loan, usuallyThough the gap varies a good deal between lenders, which is the argument for not taking the first one offered.
- Two valuationsBoth properties get assessed, and that is generally at your cost.
- Two sets of running costsRates, insurance, water and upkeep on both places for the whole overlap. Small individually, and they add up over six months.
- What happens if the term runs outThis is the one to ask about before you sign. Lenders differ on whether they extend, what they charge if they do, and what happens if they won't.
Later, not now
What to have ready
Nothing for the first conversation. This is what a lender will want.
- The property you're buyingThe contract of sale, or the listing if you haven't bid yet.
- The property you're sellingYour agent's appraisal, and the contract if you've already exchanged — which changes the loan from open to closed and improves everything about it.
- Your current loanRecent statements and the current balance.
- IncomePayslips, or returns and notices of assessment if your income comes from an ABN.
- A realistic plan for the saleWhen it goes to market, how it's being sold, and what your agent honestly thinks it will fetch. Not paperwork exactly, but the lender is lending against it.
No dead ends
Where it gets hard, and what I do about it
Bridging has one real risk and it has a name: your current place not selling for what you expected, when you expected.
Tell me where you're stuck-
You've assumed you can't carry two properties
It is the assumption that quietly costs people houses. You picture two full mortgage repayments landing in the same month, decide it isn't possible, and the place goes to somebody else.
What I do about itThat isn't how it works. Interest over the bridging period is generally capitalised — added to the loan rather than paid monthly — so you are not servicing two mortgages. And the lender assesses you on the end debt, the loan left after your place sells, not on the peak.
It takes one conversation to find out whether that puts the house within reach. It very often does.
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Your place doesn't sell inside the term
The genuine risk. Bridging runs for a set period, and if the sale hasn't completed by the end of it you are exposed — a higher rate, pressure from the lender, and in the worst case accepting a price you wouldn't have taken in month two.
What I do about itWe build the plan on a conservative sale price and a realistic timeline rather than the agent's best case, and I choose lenders partly on what they do when a term runs long — which is not something you can see on a rate comparison.
If the sale is slow, tell me early. There are options at six weeks out that do not exist at six days.
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You've overestimated what your place will fetch
Everybody does, and the gap is widest in a falling market. The whole structure rests on that number: if the sale comes in below it, the end debt is larger than the one you were assessed on and the loan you land on is not the one you planned for.
What I do about itWe stress it deliberately. You'll see the end debt at the agent's figure and at a materially lower one, so you know in advance which outcomes you can live with.
If the honest answer is that only the optimistic price works, that is worth knowing before you bid rather than after.
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Two properties, two sets of bills
Rates, insurance, water, lawns, and the general upkeep of a house you are trying to present for sale — on both properties, for the whole overlap. None of it is large and all of it arrives at once, on top of a loan balance that is quietly growing.
What I do about itIt goes in the numbers at the start rather than turning up as a surprise in month three. If the overlap is likely to be long, that changes which option makes sense and is part of why the alternatives are on this page at all.
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Your buyer pulls out after you have committed
The scenario people have nightmares about: you bought on the strength of a sale, and the sale evaporates. It is rare, it does happen, and it is the reason closed bridging is priced better than open.
What I do about itRing me the day it happens. Depending on where things stand there may be room to extend, to restructure onto a different lender, or to change the end debt — and all of those get harder the longer the call is put off.
I am not going to pretend this is comfortable. What I will do is deal with the lender for you and tell you straight what the options actually are.
Found the house before you were ready?
One call, no credit enquiry, no obligation. I'll tell you whether bridging works — or whether something simpler does.
Asked on the phone
Questions people are too polite to ask
If yours isn't here, call and ask it. Ten minutes on the phone beats a year of wondering.
Ask Alen directlyWill I be making two mortgage repayments?
Generally no. Interest over the bridging period is usually capitalised — added to the loan balance rather than collected each month — so your cash flow through the overlap looks much more like one loan than two.
The balance does grow while that happens, which is why the length of the overlap matters as much as the rate.
How much can I borrow?
The lender looks at two figures. Peak debt is everything you owe during the overlap, and it is assessed against the combined value of both properties. End debt is what remains after your place sells, and that is what your income has to support.
People are often surprised by this. The peak looks impossible and the end debt is perfectly ordinary.
How long do I get?
A set period, agreed up front, and it varies between lenders and with whether you've already exchanged on your sale. Shorter if you have, longer if you're building.
The more useful question is what the lender does if you need longer — whether they extend, at what cost, and what happens if they decline. Ask that before you sign, not when the deadline is three weeks away.
What if my place sells for less than expected?
Then the end debt is higher than the one you planned around. If the gap is small it simply means a bigger ordinary loan; if it's large it can mean the loan no longer fits your income.
Which is exactly why we run the numbers on a conservative price at the start. The point isn't pessimism, it's knowing which outcomes you can absorb before you commit to any of them.
Is bridging expensive?
More than a standard home loan, usually, and the gap varies between lenders more than people expect. But the honest comparison isn't against a normal mortgage — it's against moving twice, paying rent and storage, or losing the house.
Sometimes bridging is clearly worth it and sometimes it clearly isn't. You'll get the numbers for both.
Do I have to have sold before you'll help?
No. Lending before your place is under contract is called open bridging, it's a normal part of the market, and it's priced for the extra risk the lender is taking.
If you have exchanged, say so early — it moves you to closed bridging, which is cheaper and simpler in almost every respect.
Also on the site
One broker for all your financing needs
Residential
Home loans
What you can borrow and how it's assessed — including what changes when your income comes from an ABN.
Residential
Construction loans
Building the new place rather than buying it. The two can run together, and the order matters.
Let's talk
Request a call back
Tell me what you've found and where your own place is up to. No calendar to wrestle with — I'll call you.
Move in the order that suits you.
Twenty-one years in lending, more than twenty-five lenders, and one person across both ends of the move.