Bridging Loans Buy Before You Sell
Found your next home but haven't sold your current one? A bridging loan covers the gap so you don't miss out. Short-term finance, settled fast.
Important Information
Esteb and Co provides credit assistance services. We are licensed credit representatives (ASIC Credit Rep #574070) who help you compare loan options from our panel of lenders. We do not lend money directly. All loan approvals are made by lenders, subject to their criteria and responsible lending assessments. Our service is free to you - we receive commissions from lenders. Read our Credit Guide
What is a Bridging Loan?
A bridging loan is short-term finance that lets you purchase a new property before your current one has sold. It "bridges" the gap between buying and selling, so you don't have to choose between missing out on your new home or selling your current one under pressure.
How It Works
You Find Your New Home
You've found the perfect next property but your current home hasn't sold yet.
Bridging Finance Approved
The lender provides short-term funding secured against both properties, covering the purchase while you own two homes.
Interest Capitalised
Most bridging loans require no repayments during the bridge period — interest is added to the loan balance instead.
Your Old Home Sells
Once your existing property sells, the proceeds pay off the bridging portion and you continue with a standard home loan on the new property.
Don't Miss Out
Secure your dream home now instead of waiting months for your current property to sell. In a competitive market, timing is everything.
No Rushed Sale
Sell your current home on your terms without accepting a low offer. Take the time to get the best price without the pressure.
Move Once
Avoid the hassle and cost of temporary accommodation and double moves. Go straight from your old home to your new one.
No Monthly Repayments
With capitalised interest, you typically make no repayments during the bridging period. Everything is settled when your old property sells.
Fast Settlement
Bridging loans can often be arranged quickly, allowing you to move on competitive purchase timelines and meet settlement deadlines.
Flexible Terms
Bridging periods from 6 to 12 months (some lenders up to 24 months) give you time to sell without panic.
Real Bridging Loan Examples
See how bridging loans work in practice with realistic scenarios.
Example 1: Upgrading to a Larger Family Home
Current Situation:
- Current home value: $800,000
- Existing mortgage: $350,000
- Equity in current home: $450,000
- New home purchase price: $1,100,000
Bridging Loan Structure:
- Peak debt (both loans): $1,450,000
- Combined property value: $1,900,000
- Peak LVR: 76% (within 80% limit)
- Bridging period: 6 months
The Outcome:
✅ Bought new home: Secured the property without waiting to sell first
✅ Sold in own time: Listed current home and sold within 4 months at full asking price
✅ Interest cost: ~$14,000 in capitalised interest over 4 months (at 6.5%)
✅ After sale: Sale proceeds paid off bridging portion, ongoing loan of $650,000 on new home
✅ Net benefit: Avoided $12,000+ in temporary rent, storage, and double moving costs
Example 2: Downsizing After Kids Leave Home
Current Situation:
- Current home value: $1,200,000
- Existing mortgage: $0 (fully paid off)
- New home purchase price: $750,000
- Combined income: $110,000/year
Bridging Loan Structure:
- Peak debt: $750,000
- Combined property value: $1,950,000
- Peak LVR: 38% (very conservative)
- Bridging period: Up to 12 months
The Outcome:
✅ Moved at own pace: No rush — strong equity position gave plenty of time
✅ Sold old home: Waited for spring selling season and achieved $50K above winter offers
✅ Ended up mortgage-free: Sale proceeds of $1.2M paid off the $750K bridging loan entirely
✅ Cash surplus: $450K remaining after all costs — invested or used for retirement
Important: Bridging loans are assessed on your ability to repay if the existing property doesn't sell. Lenders will assess your income capacity to service the peak debt (both properties) as a risk control measure.
Bridging Loan Requirements
What lenders look for when approving bridging finance.
Property Requirements
- Existing property: Must be residential (most lenders won't bridge commercial to residential)
- Sale plan: Most lenders require property to be listed within 1-3 months (or already listed)
- Peak LVR: Combined lending must stay below 80% of total property value
- Valuation: Both properties will need a current valuation
- Realistic sale price: Lender will assess estimated sale price against recent comparable sales
Borrower Requirements
- Income capacity: Must demonstrate ability to service peak debt if property doesn't sell
- Good credit history: Clean credit report with no defaults
- Exit strategy: Clear plan for selling the existing property
- Equity position: Sufficient equity in current property to keep peak LVR under 80%
- Australian citizen/PR: Must be Australian citizen or permanent resident
Risks & Key Considerations
Bridging loans are powerful but come with risks you need to understand.
⚠️ Key Risks to Consider
Potential Risks:
- Property may take longer to sell than expected
- Interest accrues daily — longer bridge = more cost
- May need to drop asking price if market softens
- Higher interest rates than standard home loans
- Peak debt can be stressful if sale is delayed
- Lender may not extend if bridging period expires
How to Protect Yourself:
- Get a realistic market appraisal before committing
- Have the property ready to list immediately
- Choose a lender with a longer bridging term (12 months)
- Budget for the worst case (full 12-month interest)
- Consider selling first if the market is slow
- Use a broker to find the most flexible lender policy
💰 Typical Costs Involved
Interest (Capitalised)
Typically 6.0%-7.5% p.a. on the bridging portion. On a $500K bridge for 6 months, expect $15K-$18K in interest.
Application & Valuation Fees
$0-$600 application fee plus $300-$600 per property for valuations. Some lenders waive application fees.
Legal & Settlement
Standard conveyancing costs for the purchase ($1,500-$3,000) plus stamp duty on the new property.
Break Costs (If Applicable)
If your existing loan is on a fixed rate, you may face break costs to exit early. We'll check this before recommending bridging.
💡 Open vs. Closed Bridging Loans
An open bridging loan is when your current property hasn't yet sold — you don't have a buyer or a signed contract. This is higher risk for the lender, so rates may be slightly higher and the approval criteria stricter.
A closed bridging loan is when you've already exchanged contracts on your existing property and have a confirmed settlement date. This is lower risk and easier to get approved with more competitive rates. If possible, try to exchange before applying for bridging finance.
Bridging Loan FAQs
How long does a bridging loan last?
Bridging loans typically last 6 to 12 months, though some lenders offer terms up to 24 months. The loan is designed to be short-term — you repay it once your existing property sells. Most lenders expect you to have your current property on the market (or listed within a set timeframe) as a condition of the loan.
Do I need to make repayments on a bridging loan?
Most bridging loans are interest-capitalised, meaning interest accrues and is added to the loan balance rather than requiring monthly repayments. You pay it all off when your existing property sells. Some lenders offer the option to make interest-only repayments during the bridging period if you prefer to reduce the total interest cost.
What happens if my property doesn't sell in time?
If your property hasn't sold by the end of the bridging period, you may need to request an extension (which lenders may or may not grant), reduce the asking price to accelerate the sale, refinance into a standard home loan (if you can service both properties), or in the worst case, the lender may require you to sell at a lower price. This is the main risk of bridging finance, which is why having a realistic sale price and timeline is critical.
Are bridging loan interest rates higher than normal home loans?
Yes, bridging loan rates are typically 0.5% to 1.5% higher than standard variable home loan rates. However, because the loan is short-term (usually under 12 months), the total interest cost is often manageable. The key is to sell your existing property as quickly as possible to minimise interest charges. We compare rates across 83 lenders to find the most competitive bridging option.
Can I get a bridging loan if I haven't sold my current home yet?
Yes — that's exactly what bridging loans are designed for. You can get a bridging loan even before listing your current property, though most lenders require you to list it within 1-3 months. Some lenders are more flexible than others on this requirement. Having a signed contract of sale or at least a recent valuation on your existing property strengthens your application.
How much can I borrow with a bridging loan?
The "peak debt" (total borrowing during the bridging period) is typically capped at 80% of the combined value of both properties. For example, if your current home is worth $800,000 and the new home costs $1,000,000, the combined value is $1,800,000 and maximum peak debt would be $1,440,000. Your existing mortgage balance and the new purchase price must fall within this limit.
What fees are involved in a bridging loan?
Bridging loans may involve application fees ($0 to $600), valuation fees ($300-$600 per property), legal/settlement fees, and potentially break costs if you're leaving a fixed-rate loan. Some lenders charge a monthly line fee during the bridging period. We'll outline all costs upfront so there are no surprises.
Which lenders offer bridging loans in Australia?
Most major banks (CBA, Westpac, ANZ, NAB) offer bridging finance, as well as many smaller lenders and non-bank lenders. Policies vary significantly — some require your property to already be listed, others don't. Some allow up to 12 months, others only 6. Interest capitalisation options also differ. We compare 83 lenders to find the best bridging option for your situation.
How We Help with Bridging Loans
Bridging finance requires specialist knowledge. We guide you through every step to minimise risk and cost.
Lender Matching
Every lender has different bridging policies — term length, LVR limits, listing requirements. We match you to the most flexible and competitive option.
Cost Modelling
We model the full cost of bridging — interest, fees, stamp duty — across different sale timelines so you know exactly what to budget for.
Fast Turnaround
When you find the right property, timing matters. We prioritise bridging applications to meet your purchase settlement deadlines.
Risk Assessment
We'll honestly assess whether bridging is the right strategy for your situation — and suggest alternatives if it's not.
End-to-End Management
From bridging application through to refinancing into a long-term loan after sale, we manage the entire transition.
Ongoing Support
During the bridging period, we monitor your timeline and proactively work with the lender if an extension is needed.
Ready to Explore a Bridging Loan?
Found your next home? We'll help you work out whether bridging finance makes sense and find the most competitive option from our panel of 83 lenders.
