Bridge Loans – Higher Rates, Faster Approval (2026)

In the fast-paced world of real estate, timing is everything. Whether you're a seasoned investor or a first-time homebuyer, the gap between selling your old home and purchasing a new one can be financially daunting. This is where bridging loans come into play. But there's a common concern: do bridge loans have higher interest rates? Let's delve into this topic to help you make an informed decision.

Understanding Bridge Loans

Bridge loans, often known as bridging finance, are short-term loans designed to provide immediate liquidity during the transition period between selling your existing property and purchasing a new one. They essentially "bridge" the financial gap, allowing you to move forward with your new purchase while waiting for the sale of your current property to finalise.

These loans are typically secured against your existing property and are generally meant to be a temporary solution, usually lasting between six months to a year. While they offer flexibility and swift access to funds, the question remains: why do they often come with higher interest rates?

Interest Rates and Requirements

In 2026, the Australian financial market has seen interest rates for bridging loans range from 6.49% to 12%. This range is noticeably higher than traditional home loans, which tend to hover between 3% to 5%. The reason for this disparity is the increased risk associated with bridging loans, as they are short-term, interest-only, and subject to the successful sale of your current property.

Eligibility criteria for bridge loans can vary, but common requirements include:

• Equity in your current property
• A solid plan for repaying the loan
• Proof of income to cover interest payments
• A contract of sale (or a strong plan for selling your existing property)

Steps to Secure a Bridge Loan

Securing a bridge loan requires careful planning and understanding of your financial situation. Here are the steps to guide you through the process:

1. Assess Your Financial Position: Determine the equity in your current property and calculate the potential sale price. This will help you establish how much you can borrow.
2. Consult with a Mortgage Broker: With access to 83+ lenders, Esteb and Co can provide you with options tailored to your needs.
3. Prepare Necessary Documentation: Gather proof of income, a sales contract for your existing property, and any other financial documents lenders might require.
4. Apply for Pre-Approval: Initiate the process with your chosen lender to secure pre-approval, giving you confidence in your buying power.
5. Finalise the Bridge Loan: Once your current property sells, use the proceeds to pay off the bridge loan and any remaining interest.

Tips and Considerations

Here are some expert tips and considerations when contemplating a bridge loan:

• Consider Alternative Financing: If the interest rates are a concern, explore other options such as extending your existing mortgage or negotiating a delayed settlement.
• Understand the Costs: Be mindful of the additional costs, including valuation fees, legal fees, and exit fees, which can add to the total loan cost.
• Plan for Market Fluctuations: Property markets can be unpredictable. Ensure you have a robust plan for selling your existing property.
• Consult a Professional: A mortgage broker can help navigate the complexities of bridge loans and find a solution that best suits your situation.

Frequently Asked Questions

• What happens if my property doesn't sell within the bridging period? If your property doesn't sell within the specified period, you may need to negotiate an extension or consider alternative financing options.
• Can I use a bridge loan for buying investment property? Yes, bridge loans can be used for purchasing investment properties, but ensure you have a clear exit strategy.
• Are bridge loans interest-only? Typically, yes. Most bridge loans are structured as interest-only, requiring you to pay only the interest during the loan term.
• Can I get a bridge loan with bad credit? It may be challenging, but some lenders might consider your application if you have significant equity in your property and a solid repayment plan.
• What are the risks of a bridge loan? The primary risks include high-interest rates, additional fees, and the potential difficulty of selling your existing property within the loan term.
• How long does it take to get a bridge loan? The process can be relatively quick, often taking a few weeks, assuming all documentation is in order.
• How does Esteb and Co help with bridge loans? With access to over 83 lenders, Esteb and Co can offer competitive rates and guidance to find the best bridging finance solution for your needs.