Found the next home before selling this one? Bridging finance can cover the gap.
A bridging loan lets you buy your next property before your current one sells. It works well when the exit is planned from the start: when you will sell, for roughly how much, and what happens if it takes longer.
Timing rarely lines up. The house you want comes on the market before yours has sold, or your buyer wants a later settlement than your purchase allows. Bridging finance gives you time to sell at the right price, not the first offer.
How bridging finance works
The lender provides short-term lending to buy the new property, usually secured over both homes. When your current home sells, the sale proceeds repay the bridging loan, and you are left with a standard mortgage on the new home.
During the bridging period, some lenders let the interest add to the loan rather than being paid monthly. That helps cash flow, but it increases the amount owed when you sell.
Open and closed bridging
Closed bridging
Your current home has sold and the sale is unconditional, but settlement is after your purchase. The end date is known, so lenders see this as lower risk.
Open bridging
Your current home has not sold yet. Lenders will want to see a realistic sale plan, an up-to-date valuation or appraisal, and enough equity to cover a lower sale price or a longer sale. Fewer lenders offer open bridging, and the conditions are stricter.
What lenders look at
- Your equity across both properties. Lenders look at the combined debt against the combined value, and how much room there is if the sale price comes in lower than expected.
- Your plan to sell. An agent's appraisal, a marketing plan and a realistic timeframe.
- Whether you could carry both loans. If the sale takes longer, can you keep up with the costs?
- The end debt. What the loan on your new home will look like once the old one is sold, and whether you can afford it.
The costs to plan for
Bridging finance usually costs more than a standard home loan. Plan for interest on the bridging amount, lender and legal fees, and the possibility that the sale takes longer than expected. We will map out the likely costs before you commit.
Alternatives worth considering
- A longer settlement on your purchase. This can sometimes remove the need for bridging.
- An offer conditional on selling. Sellers may accept it, though it can weaken your offer.
- Selling first. Less risk, but you may need somewhere to live in between.
When to talk to us
Before you make an offer on the next home. That is when there is still time to compare bridging with the alternatives and choose the lender that suits your plan. The first conversation is free, with no obligation.
Common questions.
How long does bridging finance last?
It depends on the lender and your situation. Bridging finance is designed to be short term, and lenders will want a clear plan for selling within an agreed period.
Do I have to make repayments during the bridging period?
Not always. Some lenders let the interest add to the loan until your current home sells. That helps cash flow but increases what you owe at the end.
What happens if my house takes longer to sell?
You may need to extend the bridging period, reduce your asking price, or make other arrangements with the lender. That is why the plan should allow for a longer sale from the start.
Is bridging finance more expensive than a normal mortgage?
Usually, yes. The interest rate and fees are often higher, because the lending is short term and carries more risk for the lender.
What clients say about working with Carl.
Carl was an absolute pleasure to work with. His knowledge, professionalism and prompt communication gave us confidence throughout our first home purchase. He secured us an excellent deal with Westpac and made the entire process seamless. We highly recommend Carl to anyone looking for a mortgage broker.
Three of us, all self employed, wanted to get a home loan for a shared house. Without the expertise, help and the precise instructions to fill in the various documents or organise specific items we would not have had a chance to get the mortgage over the finish line. Carl was extraordinarily helpful and always found a way to continue this not so easy application. I can highly recommend Carl. Very grateful for his assistance.
Carl was fantastic to work with. Our mortgage application was not straightforward as we were multiple people, all self employed with new businesses. We had tried using other brokers but they weren't able to get our approval across the line. Carl was tenacious with the banks, and had so much knowledge he was able to guide us through all the information we required and how to present it. After a difficult process he was able to secure us a mortgage with very favourable terms. I couldn't recommend him enough, the effort and work he puts in is second to none!
Carl Mann is a fantastic mortgage broker. He is knowledgeable, professional, and has excellent communication. Carl kept us updated along the way and provided sound advice. I would definitely recommend Carl to anyone needing assistance with mortgage finance or refinancing.
Carl helped us work through the finance for our next investment property without losing sight of our existing lending. He understood what we were trying to build over the longer term and worked through the different options with us before we made an offer. That preparation made the purchase much smoother.
Development finance was very different from arranging a normal mortgage. Carl understood the feasibility, valuations, build costs and timing the lender needed to see, and helped us get everything organised before it went to credit. Having someone who understood the development side of the deal saved a lot of back and forth.
We were purchasing premises for our business and needed someone who could look at both the property and the strength of the business behind it. Carl worked through the numbers with us, explained what the lenders would focus on and helped structure the application properly from the start.
Start with a conversation.
Tell us about both properties and your timing. We will work out whether bridging is the right move, or whether there is a simpler option.
Every conversation is confidential.
Book a conversation