Bridging Loan Deposit? Secure Funds Without Delay (2026)
Worried about needing a deposit for a bridging loan? Discover simple ways to secure fast funding and gain control of your finances today.
Are you caught in the challenging situation of trying to buy a new home while still waiting to sell your current one? You’re not alone. Many Australians face this predicament and wonder, "Do I need a deposit for a bridging loan?" Understanding bridging loans can be crucial in managing your finances during this transitional phase.
Understanding Bridging Loans
Bridging loans are short-term financing options designed to help you purchase a new property while you wait for your existing property to sell. These loans "bridge" the financial gap, ensuring you don’t miss out on your dream home while your current home is still on the market.
Typically, bridging loans are interest-only loans, and the repayment of the principal occurs once your existing property is sold. The duration of a bridging loan can vary, but they generally range from 6 months to 12 months, providing ample time to finalise your sale and purchase transactions.
Bridging Loan Rates and Requirements
In the current 2026 market, bridging loans generally have interest rates ranging from 6.49% to 12%. The rates can vary significantly depending on your financial situation, the lender, and the specifics of your property transaction.
To be eligible for a bridging loan, you typically need:
- A healthy credit score
- Proof of income to demonstrate loan serviceability
- An existing property with sufficient equity
- A clear plan for repaying the loan, usually through the sale of your existing property
Unlike traditional home loans, a deposit is not always required for a bridging loan, but having substantial equity in your existing property is crucial. This equity acts as the 'deposit' for your bridging loan.
| Feature | Bridging Loan | Traditional Loan |
|---|---|---|
| Interest Rate | 6.49% - 12% | 5% - 8% |
| Term | 6 - 12 months | 15 - 30 years |
| Deposit Required | Not always | 5% - 20% |
| Repayment Type | Interest-only | Principal and interest |
Steps to Secure a Bridging Loan
Securing a bridging loan involves several key steps:
- Assess Your Financial Situation: Calculate your current equity and evaluate your ability to service the interest on the bridging loan.
- Choose the Right Lender: With access to 83+ lenders, Esteb and Co can help you find a lender offering competitive rates and terms.
- Get a Property Valuation: Have both your current and new property valued to establish the equity and potential loan amount.
- Apply for the Loan: Prepare necessary documents, including proof of income and a repayment plan, and submit your application.
- Manage the Transition: Once approved, use the funds to purchase your new home while working towards selling your existing property.
Tips and Considerations
When considering a bridging loan, keep these tips in mind:
- Plan for Contingencies: Market conditions can delay sales; have a backup plan if your property doesn’t sell within the expected timeframe.
- Understand Costs: Besides interest, be aware of any fees associated with the loan to avoid surprises.
- Consult Experts: Professional advice can be invaluable. Esteb and Co’s expertise with a vast array of lenders can help tailor a loan to your needs.
- Stay Informed: Keep abreast of market trends that may affect property prices and interest rates.
Frequently Asked Questions
- What happens if my property doesn’t sell in time? You may need to negotiate an extension with your lender or consider alternative financing options.
- Can I use a bridging loan for renovations? Yes, if the renovations increase the property’s value and appeal, aiding a quicker sale.
- Is a bridging loan more expensive than a regular loan? Typically, yes, due to higher interest rates and shorter terms.
- Can I rent out my property while it’s on the market? This depends on the terms of your bridging loan and should be discussed with your lender.
- How long does it take to process a bridging loan? It can take anywhere from a few days to a few weeks, depending on the lender’s requirements and your preparedness.
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With direct experience helping Australians secure home loans, car finance, and business funding, Ricky founded Esteb and Co to bring transparency and technology to mortgage broking.