Bridging Loan – Secure Funds Fast When Banks Say No

Transitioning between homes can be a stressful experience. If you're caught in the tricky situation of needing to purchase a new property before the sale of your current one is finalised, you might find yourself in need of a bridging loan. Understanding how bridging loans work and knowing if you can secure one could be the key to smoothly navigating this challenging period.

Understanding Bridging Loans

Bridging loans are short-term financing solutions designed to help homeowners bridge the financial gap between buying a new property and selling their existing one. They are particularly useful when the timelines of selling your current home and purchasing a new one do not align. These loans provide temporary funding to cover the cost of the new property, allowing you to make the purchase without having sold your current home first.

Current Market Rates and Requirements

As of 2026, bridging loans in Australia are typically offered at interest rates ranging from 6.49% to 12%. The rates can vary significantly based on the lender, the borrower's credit profile, and the specifics of the loan. Bridging loans are usually interest-only for the bridging period, with the principal being paid off once the existing property is sold.

To be eligible for a bridging loan, lenders generally require:

• Proof of income to service the loan
• A realistic plan for selling the existing property
• Substantial equity in the current home
• A good credit history

At Esteb and Co, we work with over 83 lenders, giving you a broad range of options to find the most suitable bridging loan for your circumstances.

Lender	Interest Rate	Maximum Loan Term
Lender A	6.49%	12 months
Lender B	8.25%	6 months
Lender C	9.75%	9 months

Steps to Secure a Bridging Loan

Securing a bridging loan involves several key steps:

1. Assess Your Financial Situation: Calculate your capacity to manage loan repayments along with existing financial commitments.
2. Valuate Your Property: Obtain a professional valuation of your current home to understand its market potential.
3. Consult with a Mortgage Broker: Engage with experts like Esteb and Co who can navigate you through the intricacies of securing a loan from a wide array of lenders.
4. Choose a Suitable Lender: Compare offers from different lenders to find the best terms and rates tailored to your needs.
5. Submit Your Application: Prepare and submit the necessary documentation, including proof of income, property valuation, and a plan for sale.
6. Finalise the Loan: Once approved, review the terms carefully before signing the loan agreement.

Expert Tips and Considerations

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

• Timeframe Awareness: Understand the loan's timeframe and have a clear plan for selling your existing property within this period.
• Cost Consideration: Be aware of additional costs such as valuation fees, legal fees, and potential penalties for delayed property sales.
• Market Conditions: Stay informed about the real estate market trends, as they can significantly impact your selling strategy and timing.
• Loan Structure: Consider whether a single loan covering both properties or separate loans is more advantageous for your situation.

Frequently Asked Questions

1. What happens if I can't sell my current home within the bridging period?
If you can't sell your home within the agreed period, you may need to negotiate an extension with your lender, which could incur additional costs.

2. Can I use a bridging loan to purchase an investment property?
Yes, bridging loans can be used for purchasing investment properties, but the risks and costs should be carefully evaluated.

3. How is the loan amount determined?
The loan amount is typically based on the equity in your current property and the value of the property you intend to purchase.

4. Are there any tax implications?
Tax implications can vary, so it's advisable to consult a tax professional to understand any potential effects on your tax situation.

5. Is a bridging loan the right option for me?
This depends on your financial situation, risk tolerance, and the specifics of your property transaction. Consulting with a mortgage broker can provide tailored advice.

6. Can a bridging loan affect my credit score?
As with any loan, your credit score can be impacted by missed payments or defaults, so it's crucial to manage repayments diligently.

Navigating the complexities of bridging loans requires careful planning and expert guidance. At Esteb and Co, we leverage our extensive lender network to help you find the optimal solution for your property transition needs.