Bridging finance covers the gap when you buy the next place before the current one sells. It solves a real problem — you do not have to move twice or lose the house you want — and it carries a real risk, which is what happens if the old place takes longer to sell than you planned.
Peak debt and end debt
Two terms that make the whole thing make sense:
Peak debt is what you owe while you hold both properties: your existing loan, plus the new purchase, plus costs. End debt is what is left after the old property sells and the proceeds come off.
The lender assesses both. Peak debt has to be secured by the two properties together; end debt has to be a loan you can genuinely service long term. If end debt does not work, the deal does not work — regardless of how confident you are about the sale.
How repayments work during the bridge
Most bridging is interest only for the bridging period, and many lenders capitalise that interest — it accrues onto the loan rather than being paid monthly. That keeps your cash flow survivable while you are carrying two properties.
It also means the debt is growing the entire time the old place sits unsold. That is the pressure point.
How long you get
Typically six months for an existing property, sometimes twelve for a build. If the sale has not happened by then, options narrow: extend if the lender agrees, refinance onto something more expensive, or drop the price to move it.
Which is the honest risk of bridging. Not that it is expensive — it is manageable — but that it puts a deadline on a sale, and a deadline is exactly the thing that weakens your negotiating position.
What it costs
- Interest on peak debt for the bridging period — the biggest component
- A bridging or application fee at some lenders
- Valuations on both properties
- Rates, insurance and upkeep on two homes at once
Ask for the total cost across a realistic bridging period, not the rate. And ask what happens at the end of the term if the sale has not gone through, in writing.
The alternatives worth weighing
- Sell first, then buy. Cheapest and lowest risk. You know exactly what you have to spend. Costs you a rental period, or a long settlement negotiated with the buyer.
- A long settlement on the purchase. Ninety or 120 days can give you enough runway to sell without any bridging at all. Often overlooked, and free.
- Simultaneous settlement. Elegant when it works, fragile when it does not — one side slipping breaks the chain.
When bridging is the right answer
When you have found something genuinely hard to replace, your existing property is in a market where it will move, and you have priced it to sell rather than to test the market. In that situation bridging buys you a good outcome for a manageable cost.
When you are hoping for a strong price on the old place to make the sums work, it is the wrong tool. The deadline works against you exactly when you need patience.
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General information only — it does not take your objectives, financial situation or needs into account and is not credit assistance. Bridging terms, costs and maximum periods vary between lenders and change. Nothing here is a guarantee of approval. Easy Loan Finance is a Credit Representative (CRN 568863) of Beagle Finance Pty Ltd, Australian Credit Licence 383640.
