Bridging Loans – Relief When Time's Ticking (2026)

Imagine finding your dream home, a rare gem in the perfect location, only to realise your current property hasn't sold yet. The stress of managing property transactions can be overwhelming, especially when timing doesn't align. This is where bridging loans come into play, offering a potential solution to manage the transition between selling your old home and buying a new one. But are bridging loans the right choice for everyone?

Understanding Bridging Loans

Bridging loans are short-term financing options designed to "bridge" the gap between buying a new property and selling your existing one. Typically used in real estate transactions, these loans provide the necessary funds to purchase a new home without waiting for the sale of your current property to finalise. Unlike traditional home loans, bridging loans are temporary and come with specific terms and conditions.

These loans are particularly useful in a competitive property market where securing a new home quickly is crucial. However, they are not a one-size-fits-all solution and understanding how they work is essential before making a decision.

Bridging Loan Rates, Requirements, and Options

In 2026, bridging loans in Australia typically have interest rates ranging from 6.49% to 12%, depending on the lender and the borrower's financial situation. It's important to note that these rates are often higher than standard mortgage rates due to the short-term nature and increased risk for lenders.

Eligibility for a bridging loan generally requires:

• A strong credit history
• Proof of income to service the loan
• Equity in your current property
• A well-defined exit strategy, such as a contract for the sale of your existing home

Bridging loans can be structured in two main ways:

• Closed Bridging Loan: This type requires a set repayment date, usually aligned with the sale of your existing property.
• Open Bridging Loan: More flexible, without a fixed end date, but often comes with higher interest rates and requires a substantial deposit.

Loan Type	Interest Rate Range	Features
Closed Bridging Loan	6.49% - 9%	Fixed repayment date, lower rates
Open Bridging Loan	9% - 12%	Flexible end date, higher rates

Steps to Secure a Bridging Loan

Securing a bridging loan involves several key steps:

1. Evaluate Your Financial Situation: Assess your current financial status and ability to meet potential loan repayments.
2. Determine Your Loan Amount: Calculate the funds needed to cover the purchase of your new home, considering potential sale proceeds from your current property.
3. Research Lenders: Explore options among Esteb and Co's 83+ lender panel to find a rate and terms that suit your needs.
4. Prepare Necessary Documentation: Gather proof of income, property valuations, and a clear exit strategy.
5. Submit Your Application: Complete the application process with your chosen lender, providing all required documentation.
6. Review Loan Offer: Carefully assess the terms, conditions, and costs involved before accepting any offer.

Tips and Considerations for Bridging Loans

When considering a bridging loan, keep the following tips in mind:

• Have a Solid Exit Strategy: Ensure you have a clear plan to repay the loan, such as a confirmed sale date for your existing property.
• Budget for Higher Costs: Be prepared for higher interest rates and potential additional fees associated with bridging loans.
• Consider Market Conditions: In a fluctuating market, selling your existing property might take longer than anticipated, impacting your loan strategy.
• Consult with Professionals: Seek advice from mortgage brokers like those at Esteb and Co to navigate options and secure favourable terms.

Frequently Asked Questions

1. Can I get a bridging loan with bad credit? While possible, it can be challenging. Lenders prefer borrowers with strong credit histories, but some may consider applicants with lower scores at higher interest rates.

2. How long does it take to get a bridging loan? The process can vary but generally takes a few weeks, depending on lender requirements and how quickly you can provide necessary documentation.

3. What happens if my property doesn't sell in time? If your property doesn't sell as planned, you may need to discuss extending the loan term with your lender, which could incur additional costs.

4. Are there alternatives to bridging loans? Yes, alternatives include using savings, negotiating longer settlement periods, or considering a home equity line of credit.

5. How are bridging loans repaid? Typically, they are repaid once your existing property is sold, using the proceeds to clear the loan.

6. Are bridging loans interest-only? Many bridging loans are structured as interest-only, meaning you pay only the interest during the loan term, with the principal due at the end.

7. What are the risks of a bridging loan? Risks include higher interest rates, the possibility of your property not selling, and potential financial strain if unable to meet repayments.