Bridging Loans – Relief When Banks Say No (2026)

Are you caught in the stressful juggle of selling your existing home while trying to purchase a new one? Many Australians find themselves in this predicament, balancing timelines and financial commitments. Bridging loans could be the key to easing this transition, allowing you to buy your new home before selling your current one. But do banks really offer bridging loans, and are they the right solution for you? Let's delve into the world of bridging loans and explore how they can serve as a bridge to your new home.

Understanding Bridging Loans

Bridging loans are short-term financial solutions designed to bridge the gap between buying a new property and selling your existing one. Essentially, they provide the funds needed to purchase your new home while you wait for your current property to sell, ensuring you don’t miss out on your dream home because of timing issues.

These loans are typically interest-only and are intended to be temporary, usually lasting from a few months up to a year. Bridging loans can be a lifesaver for those who have found their ideal home but are still in the process of selling their current property.

Current Market Information: Rates, Requirements, and Options

In 2026, the Australian property market continues to be competitive, with properties often moving quickly. This makes bridging loans an attractive option for many homeowners. However, it's crucial to understand the financial implications and requirements.

Interest rates on bridging loans can vary significantly, generally ranging from 6.49% to 12% depending on the lender and your financial situation. These rates are typically higher than standard home loans due to the short-term nature and increased risk for lenders.

Lenders usually require you to have a certain amount of equity in your current home, typically around 20%. The eligibility criteria often include having a solid repayment plan for the loan's end term, which usually involves the sale of your existing property.

At Esteb and Co, with access to over 83 lenders, we can help you find the bridging loan that best suits your needs, ensuring you understand the terms and conditions involved.

Steps to Secure a Bridging Loan

Securing a bridging loan involves several key steps:

1. Assess Your Financial Situation: Evaluate your current financial standing, including your equity, income, and credit score.
2. Consult a Mortgage Broker: Work with a professional like Esteb and Co to navigate the options available from 83+ lenders.
3. Determine Loan Requirements: Understand the specific requirements of the bridging loan, including interest rates and repayment terms.
4. Plan Your Property Sale: Have a clear plan for selling your existing property, as this will affect your loan terms and conditions.
5. Submit Your Application: Complete the application process with your chosen lender, ensuring all necessary documentation is accurate and complete.
6. Manage Your Loan: Once approved, manage your loan carefully, making interest payments on time and keeping your lender informed of your property sale progress.

Tips and Considerations

Here are some expert tips to consider when contemplating a bridging loan:

• Understand the Risks: Bridging loans carry higher interest rates and fees, so it's crucial to understand the financial commitments.
• Plan for Delays: Property sales can take longer than expected. Ensure you have a contingency plan in place.
• Discuss with Experts: Always consult with a mortgage broker to explore all available options and secure the best possible terms.
• Read the Fine Print: Carefully review all loan documents to understand any conditions or fees that might apply.
• Keep Communication Open: Maintain open communication with your lender, especially if circumstances change.

Frequently Asked Questions

1. What is the maximum term for a bridging loan? Most bridging loans have a term of up to 12 months, although some lenders might offer longer terms depending on individual circumstances.
2. Can I pay off a bridging loan early? Yes, most lenders allow early repayment, but it's essential to check for any early repayment fees.
3. What happens if my existing home doesn’t sell? If your home doesn't sell within the agreed term, you may need to renegotiate the loan or consider other financing options.
4. Are there specific fees associated with bridging loans? Yes, bridging loans often come with higher fees, including establishment fees and higher interest rates.
5. How do bridging loans differ from regular home loans? Bridging loans are short-term, interest-only loans designed to cover the gap between buying and selling properties, while regular home loans are long-term with principal and interest repayments.
6. Is a bridging loan a good option for investment properties? Bridging loans can be used for investment properties, but they may not always be the most cost-effective option due to higher rates.
7. Can I apply for a bridging loan if I have multiple properties? Yes, as long as you meet the lender’s criteria, including equity and repayment plans, you can apply for a bridging loan with multiple properties involved.