Bridging Loan? Get Approved Fast When Banks Say No

Are you caught in the tricky situation of needing to purchase your next home before you've sold your current one? You're not alone. Many Australians find themselves in this financial conundrum, and the solution might just be a bridging loan. But is it the right option for you? Let's explore how bridging loans work, their current landscape in 2026, and how you can secure one to ease your transition.

Understanding Bridging Loans

Bridging loans are short-term financing solutions designed to 'bridge' the gap between buying your new property and selling your existing one. They can be a lifesaver for those who need immediate funds to purchase a new home but are yet to finalise the sale of their current property. Typically, these loans are interest-only and meant to be repaid once your old property is sold.

Current Bridging Loan Rates and Requirements

The Australian property market in 2026 remains competitive, with demand often outpacing supply, making bridging loans a popular choice. However, they come with specific requirements and costs that need careful consideration.

Interest rates for bridging loans can range from 6.49% to 12%, depending on the lender and your financial situation. These rates tend to be higher than standard home loans due to the short-term nature and risk involved.

Here is a quick comparison of bridging loan options:

To qualify for a bridging loan, lenders typically require:

• Proof of income to service both the bridging loan and any existing debts.
• A solid sales strategy for your existing property.
• A deposit for the new property, often at least 20%.

Steps to Obtain a Bridging Loan

Securing a bridging loan involves several critical steps. Here’s how you can navigate the process smoothly:

1. Assess Your Financial Situation: Calculate your borrowing capacity, including your ability to service both properties temporarily.
2. Contact a Mortgage Broker: A professional from Esteb and Co, with access to 83+ lenders, can help identify the best options tailored to your needs.
3. Pre-Approval: Apply for pre-approval on your bridging loan to understand your budget for the new property.
4. List Your Current Property: Engage a real estate agent to list and sell your existing home, providing a clear timeline for the lender.
5. Finalise Purchase and Sale: Use the bridging loan to secure your new house while finalising the sale of your old one.
6. Repay the Bridging Loan: Once your property is sold, repay the bridging loan, transitioning to a standard mortgage on the new property.

Expert Tips and Considerations

While bridging loans can offer a solution, they require careful planning and consideration. Here are some expert tips to help you make the most of this financial tool:

• Realistic Valuation: Ensure your current property is accurately valued to avoid over-borrowing.
• Contingency Plans: Have a backup plan if your property takes longer to sell than anticipated.
• Costs Awareness: Be mindful of potential additional costs such as property valuation fees, legal fees, and early repayment penalties.
• Short Loan Term: Aim to keep the bridging loan term as short as possible to minimise interest expenses.

Frequently Asked Questions

1. What happens if my house doesn't sell within the bridging loan period?

   If your house doesn't sell within the agreed period, you might need to negotiate an extension with the lender or explore additional financing options.

2. Are there any risks associated with bridging loans?

   Yes, risks include higher interest costs, potential difficulty selling your property, and the need for a strong financial position to cover dual property costs temporarily.

3. Can I use a bridging loan for investment properties?

   Yes, bridging loans can be used for investment properties, but lenders may have stricter criteria and higher rates for such cases.

4. What documents are required for a bridging loan application?

   Typically, you'll need proof of income, identification, details of your existing mortgage, and a plan for selling your current property.

5. How is the interest on a bridging loan calculated?

   Interest is usually calculated on the full loan balance during the bridging period, which can increase overall costs.

6. Do I need to sell my existing home before applying for a bridging loan?

   No, you don't need to sell first, but having a clear sales plan is crucial to secure the loan.

Understanding whether a bridging loan is the right solution for you involves assessing your financial situation, exploring the available options, and seeking professional advice. At Esteb and Co, our extensive panel of 83+ lenders ensures you have access to the best possible advice and rates tailored to your unique circumstances.