Bridging Loans – Secure Funds Fast When Banks Say No

Feeling stuck between selling your existing home and purchasing a new one? You're not alone. Many Australians face this exact dilemma, unsure of how to bridge the financial gap between transactions. Enter bridging loans—a potential solution to your real estate woes. But do banks give bridging loans, and are they the right choice for you? Let's dive into the details.

Understanding Bridging Loans

Bridging loans are short-term financial solutions designed to cover the gap between buying a new property and selling your current one. They can offer the flexibility you need to secure a new home before your existing one is sold. Typically, these loans are interest-only and have a term ranging from a few months to a year.

The primary advantage of a bridging loan is that it allows you to move quickly in a competitive real estate market, avoiding the need to sell your home before purchasing a new one. However, it’s crucial to understand how these loans work and the potential costs involved.

Current Rates, Requirements, and Options

As of 2026, bridging loan interest rates in Australia typically range from 6.49% to 12%. These rates can vary based on the lender, loan amount, and your financial situation. It's essential to compare offers from different financial institutions to find the most favourable terms.

Eligibility for a bridging loan generally requires you to meet certain criteria:

• Proof of stable income
• A significant amount of equity in your current property
• A clear plan for selling your existing home

Here's a comparison of options available through some popular lenders:

Esteb and Co, with access to 83+ lenders, can help you navigate these options to find a bridging loan that's best suited to your needs.

Steps to Secure a Bridging Loan

Securing a bridging loan involves several key steps:

1. Evaluate Your Financial Situation: Assess your income, equity, and the value of your current home. Ensure you have a realistic selling price in mind.
2. Research Lenders: Explore various lenders and compare their bridging loan offerings. Consider both banks and alternative lenders.
3. Get Pre-Approval: Obtain pre-approval to understand the loan amount you qualify for, which can make your property search more focused.
4. Plan Your Move: Have a clear plan for selling your existing home, including timelines and marketing strategies.
5. Consult a Professional: Work with a mortgage broker from Esteb and Co to leverage their extensive lender panel and expertise.
6. Submit Your Application: Once you find a suitable lender, submit your application with all necessary documentation, such as proof of income and property details.

Tips and Considerations

Before committing to a bridging loan, consider these expert tips:

• Understand the Costs: Be aware of potential fees, including application, valuation, and exit fees, which can add to the overall cost of the loan.
• Have a Backup Plan: If your existing home takes longer to sell than expected, ensure you have a strategy in place to manage ongoing repayments.
• Keep an Eye on the Market: Stay informed about real estate trends, as market fluctuations can impact your selling price and timelines.
• Consider Alternatives: If a bridging loan seems too risky, explore other options like renting out your existing property temporarily.

Frequently Asked Questions

1. Can I get a bridging loan if I have a mortgage on my current home?

Yes, you can. However, the amount you can borrow will depend on the equity you have in your current home.

2. What happens if my home doesn't sell within the bridging loan term?

If your home doesn't sell, you may need to refinance or negotiate an extension with your lender, if possible.

3. Can I use a bridging loan to purchase an investment property?

Yes, bridging loans can be used for investment properties, but lenders may have stricter criteria for such purposes.

4. How quickly can I get a bridging loan approved?

Approval times vary, but with the right documentation, some lenders can approve bridging loans within a week.

5. Are there tax implications with bridging loans?

Interest on a bridging loan may be tax-deductible if the loan is for an investment property. Consult a tax professional for advice.

6. Is it possible to extend a bridging loan term?

Extensions are possible but depend on lender policies and your circumstances. It's best to discuss this option upfront with your lender.

7. Do all banks offer bridging loans?

Not all banks offer bridging loans, which is why consulting with a mortgage broker like Esteb and Co is beneficial to find available options.