Own two homes for a while, without selling in a panic.
A bridging loan covers the gap between buying your next home and selling your current one. It's genuinely useful — but it's also one of the most misunderstood products in the market. The whole thing turns on two numbers, peak debt and end debt, and one clock: how long your old place takes to sell. Here's exactly how it works, and where the risk actually sits.
Peak debt, then end debt — the shape of every bridging loan.
When you settle the new home before the old one sells, your total debt spikes to its peak. Once the old home sells, the sale proceeds knock it down to your end debt — the ordinary home loan you keep. This is a worked example a major bank publishes; your numbers depend on your equity and sale price.
Illustrative worked example published by NAB — a labelled example, not a quote or an offer of credit. Peak debt is typically capped around 80% of the two properties' combined value, so meaningful equity is usually required; above that, lenders' mortgage insurance may apply. Your peak and end debt depend on your loan balance, the new purchase price, your costs, and — critically — what your existing home actually sells for.
Have you already sold, or not yet? It changes everything.
Lenders price and structure bridging differently depending on whether your exit — the sale of your existing home — is locked in.
Closed bridging
You've already exchanged an unconditional contract on your existing home, so the sale date and proceeds are known. The lender can see exactly how the debt comes down — which usually means a shorter term and easier approval.
Open bridging
Your current home isn't sold yet — no unconditional contract. The timing and sale price are unknown, so the lender carries more risk: expect a longer term, tighter conditions, and a bigger equity buffer to protect against a slow or soft sale.
Bridging terms are typically 6 to 12 months; lenders rarely extend past 12 without extra conditions. Getting the structure right — and pricing your existing home to sell inside the term — is where a broker earns their keep.
Two ways bridging interest is charged — and why it matters.
Interest-only (major banks)
Many major-bank bridging loans are interest-only on the peak debt while you hold both homes — you pay the interest in cash each month but don't reduce the principal until the sale.
Capitalised (non-bank / private)
Non-bank and private bridging often capitalise the interest — it's added to the loan balance instead of paid in cash, so repayments effectively start after the sale. Convenient, but the balance grows every month.
Why capitalising bites
Capitalised interest is charged on the whole peak debt. The longer the old home sits unsold — or the lower it sells for — the bigger your end debt. A rate rise steepens that curve.
Bridging lives or dies on how fast your old home sells — and it's getting slower.
Every bridging loan assumes your existing home sells inside the term. Right now that assumption is under more pressure: the national median time on market has crept up to 34 days (three months to May 2026), from 30 a month earlier, and national dwelling values were flat at 0.0% in May — with Sydney and Melbourne slightly down. A softer, slower market widens the risk that your home sells for less, or later, than you planned.
Median days on market is comfortably inside a 6–12 month bridging term in a fast city like Perth — but the buffer shrinks in slower markets, and it's the trend that counts. This is exactly why we help you price to sell inside the term, not chase the last dollar and blow the clock.
Sources: Cotality (CoreLogic) Home Value Index / Housing Market Update — national median days on market 34 (3 months to May 2026, up from 30 to April); capital-city figures May 2026 (Perth reference April 2026). National values 0.0% in May 2026. Figures are point-in-time and revised each release.
Indicative bridging rates — and why they're higher than a sharp variable.
Bridging is short-term and higher-risk for the lender, so it's priced above the keenest advertised home-loan rates. These are indicative ranges as at July 2026 and move with the RBA cash rate and lender policy — not a quote.
Major-bank bridging
Typically priced at or close to a standard variable home-loan rate. Usually interest-only on the peak debt, with the big banks' assessment and equity requirements.
Non-bank / private bridging
Faster and more flexible — or the answer when a bank won't bridge — but materially dearer, and often with capitalised interest. Priced on LVR, property quality, term and how strong your exit is.
Indicative only, as at July 2026. Major-bank range derived from the RBA benchmark new owner-occupier variable rate (~6.22% p.a., May 2026) plus lender guidance that bridging is priced near standard variable; non-bank/private range is an aggregated industry indication (one comparison table showed ~8.10–9.76% p.a.). Bridging rates are variable and rise with the RBA cash rate (4.35%, held July 2026) — and where interest capitalises, a rate rise compounds your end debt. We confirm a live rate for your situation before you commit.
Bridging isn't the only way to buy before you sell.
Sometimes a bridging loan is exactly right. Other times, a deposit bond, a longer settlement, an equity release on your current home, or simply selling first and renting briefly works out cheaper and less stressful. The honest answer depends on your equity, your timeline and how confident you are of the sale.
We'll model the real alternatives alongside bridging so you choose with numbers, not pressure. This is general information, not personal credit advice.
Bridging loans, answered straight.
What is peak debt and end debt?
Peak debt is the highest total you owe while you temporarily hold both homes — your existing mortgage plus the new purchase plus costs. End debt is what's left after your old home sells and the net proceeds are applied: end debt = peak debt − net sale proceeds. The end debt becomes an ordinary home loan you keep servicing.
How long does a bridging loan last?
Typically 6 to 12 months. Closed bridging (your sale is already under an unconditional contract) is lower-risk and often shorter, around 6 months; open bridging (not yet sold) usually runs up to 12 months with tighter conditions. Lenders rarely extend beyond 12 months without extra requirements.
Do I make repayments during the bridging period?
It depends on the lender. Major-bank bridging is often interest-only on the peak debt — you pay interest in cash but don't reduce the principal until the sale. Non-bank and private bridging frequently capitalise the interest instead, adding it to the balance, so repayments effectively begin after your old home sells.
How much equity do I need?
Peak debt is generally capped at around 80% of the combined value of both properties, so you usually need meaningful equity in your current home. Above roughly 80% LVR, lenders' mortgage insurance may apply. The exact requirement varies by lender and your situation.
What if my home doesn't sell in time?
This is the main risk. If the sale is slow or comes in below expectation, your end debt is larger than planned — and with capitalised interest, the balance keeps growing while the home sits unsold. That's why we help you set a realistic sale price and timeline before you commit, and stress-test what happens if it takes longer.
Are bridging rates higher than a normal home loan?
Usually, yes. Bridging is short-term and higher-risk for the lender, so it's priced above the sharpest advertised variable rates — roughly around a standard variable rate at the major banks, and higher again with non-bank or private lenders. Rates are variable and move with the RBA cash rate.
Thinking of buying before you sell? Let's run the real numbers first.
Tell us your loan balance, your target purchase and your current home — we'll map your peak and end debt, compare bridging across lenders, and show you the alternatives before you commit to anything.
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