Find a Bridging Loan

Bridging finance covers the gap between buying your new property and selling your old one.

Bridging home loans can be used by home buyers who have found a home they want to buy but haven't yet found a buyer for their previous home. Bridging loans can generally be organised very quickly, and can help borrowers who need to move quickly to secure the purchase of a new property.

Use our calculator and compare bridging finance rates today

Rates last updated November 13th, 2018
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Loan purpose
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
5.99%
6.07%
$900
$0 p.a.
85%
Get finance to cover the gap between selling and buying properties.
4.05%
4.09%
$0
$0 p.a.
80%
Bridging loan with a competitive interest rate.
5.95%
6.17%
$1,350
$10 monthly ($120 p.a.)
80%
A feature-packed bridging loan.
6.04%
6.07%
$395
$8 monthly ($96 p.a.)
85%
Bridging loan that lets you borrow up to 85% LVR.
5.99%
6.07%
$900
$0 p.a.
80%
Pay $0 ongoing fee and borrow up to 80% LVR.
5.95%
6.11%
$600
$10 monthly ($120 p.a.)
90%
A bridging home loan which takes the stress out of selling your old home before switching to another regular St.George loan.

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How do bridging loans work?

Bridging loans are calculated on the amount owing on your current mortgage, plus the purchase price of your new property. This figure is known as your "peak debt". For example, if you owe $250,000 on your current mortgage and are purchasing a new property for $600,000, your peak debt would be $850,000.

Your lender will then subtract the likely sale price of your existing home from this figure, generally building in a buffer to take into account the possibility of selling at a lower price, to arrive at your ongoing balance. This will be the amount of your bridging loan.

Bridging loans are interest-only loans, meaning you only owe for the interest charged on your ongoing balance. Lenders will usually capitalise this interest, making it payable upon the sale of your existing property. At this point, the bridging loan will revert to a normal home loan.

The two main types of bridging loans are known as: Closed Bridge and Open Bridge.

Closed bridging loans

Closed Bridging Finance has a pre-agreed date by which the property will be sold and the loan repaid. A closed bridge is only available to homebuyers who have already exchanged on the sale of their existing property.

Open bridging loans

An Open Bridge differs in that it is taken out by buyers who have found their perfect property but haven't found a buyer for their existing home. Lenders are often hesitant to offer open bridging loans and will expect to see details about the new property proof that your current home is being actively marketed. Lenders will also insist you have a significant amount of existing equity in your current property and an exit strategy in case the sale falls through.

Get more information about open bridging loans

How long do bridging loans last for?

Bridging loans are generally offered for periods up to 6 months, though in some cases lenders may offer a bridging period of up to 12 months. Most bridging loans are for the purchase of an established property, though some lenders will allow bridging loans for the construction of a new property.

Keep in mind you will still need a 20% deposit for your new property, as bridging loans aren't covered by lenders mortgage insurance (LMI). If you do not have funds readily available then a deposit bond is one alternative. A deposit bond is a substitute for a cash deposit that guarantees the purchaser will pay the full purchase amount by the settlement date.

When applying for a deposit bond, an independent assessment will be made by your deposit bond provider. Bonds can be issued for a period of up to 48 months, however the shorter the period the bond is required, the lower the cost to the borrower.

What else do I need to be aware of?

While there are many advantages with bridging loans, there are some disadvantages too. In some cases, people may find it harder to sell their existing homes as quickly as they thought, which means you'll be up for a lot more interest since you're now paying off two mortgages.

Another catch is some people may be forced to sell their existing home for a lower price than was originally intended. Others may find they don't have sufficient equity in their homes to qualify for a bridging loan.

Advantages

  • Avoid paying for two home loans. The main feature of a bridging finance loan is that it will allow you to avoid taking out another full home loan loan.
  • Interest-only repayments. While you have the bridging finance loan you will not have to make full repayments on both loans. You will have to pay off your regular loan as you have been and you will only have to pay the interest portion of the repayments on the bridging finance.

Disadvantages

  • You will need to know how much your home will sell for. When you get a bridging finance loan you should be able to accurately predict how much your old property will sell for. If it doesn't sell for as much as you plan then you may find that you don't have enough money to pay off the loan and buy the new home.
  • The longer the sale takes the more interest you will pay. It can be hard to predict how long it will take to sell your old home. If the old home takes a long time to sell you'll have to pay more in interest.
  • You could face break costs. If your current mortgage is a fixed rate home loan, you may have to pay break costs associated with exiting the loan early.

Other examples of where a bridging loan can be beneficial

A bridging loan is often obtained by developers to carry a project while permits are approved. Since the project going ahead is not guaranteed, the loan may have a higher rate of interest and be from a specialised lending source that will accept the risk. Once the project is fully entitled, it becomes eligible for loans from more conventional sources in greater amounts, over longer periods and with lower interest rates. A construction loan would then be obtained to take out the bridge loan and fund completion of the project.

A bridging loan can be also used by a business to ensure continued smooth operation during a time when, for example, one senior partner wishes to leave whilst another wishes to continue the business. The bridging loan could be made based on the value of the company premises allowing funds to be raised via other sources, for example, a management buy-in.

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14 Responses

  1. Default Gravatar
    BobJanuary 29, 2018

    Is it possible to obtain bridging finance to cover the time delay with foreign currency transactions? For example, suppose it takes 3 months for PNG Kina to be transferred to AUD. I have a Australian supplier sold goods to my company in PNG and he wants payment within 30 days. Is there such a bridging loan facility that will pay my supplier immediately, then I pay off the loan in 3 months once my foreign currency is exchanged and arrives in Australia ?

    • finder Customer Care
      JonathanFebruary 23, 2018Staff

      Hi Bob, thanks for your inquiry.

      As per the definition of bridging loans “Bridging finance (e.g. a bridge loan), is a type of finance that can help businesses and investors manage the cash flow gap that can occur between the purchase of one asset and the sale of another.”, foreign currency transactions do not qualify for this type of loan. It would be recommended to clear the funds first before finalising the purchase of the property.

      Thanks,

      Jonathan

  2. Default Gravatar
    November 17, 2015

    Hi There
    I have had my Sydney home on the market for a few weeks only with several offers already none have gone ahead. Planning to buy for $800k and sell at $1.2 Million. Current balance on mortgage is $1200 only.
    Would I be eligible for bridging finance as retired person? Have seen place to buy and they are willing to give me 90 day long settlement. Is this too risky ?
    Thanks !

    • finder Customer Care
      BelindaNovember 18, 2015Staff

      Hi David,

      Thanks for your enquiry.

      Please be mindful that lenders typically impose strict criteria for bridging finance, and you may need to demonstrate an unconditional sale on your existing property. The lender may also have restrictions on the settlement terms but this will be treated on a case-by-case basis.

      As you’ll see above on this page, bridging loans can be risky in the sense that the longer the sale takes, the more interest you will pay and it can be difficult to know how long it will take to sell your existing property.

      Lenders have different eligibility criteria for bridging finance, and for retirees, so you should consult the lender directly to see whether you would qualify. They will take into consideration your income, assets, and any other liabilities you have to assess your serviceability potential.

      If you’re interested in one of the bridging loans in the above table, you can click the ‘enquire now’ button to be redirected to the lender’s website.

      Thanks,
      Belinda

  3. Default Gravatar
    VinnyJuly 24, 2015

    My home is for sale at $480.000 I own it outright but need a $250.000 bridge for 2/3 months. As an aged pensioner will this affect me getting a loan ? and what would the repayments be. Mant thanks.

    • Default Gravatar
      JodieJuly 24, 2015

      Hi Vinny,

      Thank you for your comment.

      You have come through to finder.com.au, we are a financial comparison website so are not able to offer you personalised advice. Generally speaking each lender has their own criteria that they would take into account when deciding on whether to offer you a loan. It would be best to contact one of the lenders on this page to discuss your lending needs or alternatively you can contact a mortgage broker who can assist you.

      Regards
      Jodie

  4. Default Gravatar
    paulineJuly 14, 2014

    We are looking for bridging finance to allow us to move. We own our current home outright. We are both retired. Our home is valued at $579k and we want to borrow $375k until our house is sold. What is the best way to go, traditional big banks or use a broker. Many thanks for any help

    • finder Customer Care
      ShirleyJuly 15, 2014Staff

      Hi Pauline,

      Thanks for your question.

      A mortgage broker has access to a wide range of loans and will take your situation into account. Some borrowers prefer bigger banks if they already have a good relationship with them, and they could provide more security.

      The decision is ultimately up to you, you can compare lenders according to what you need from your personal and financial situation.

      Cheers,
      Shirley

  5. Default Gravatar
    AApril 8, 2014

    Do you need to organise bridging before you bid at an auction? We have just sold our house already but settlement will be 3 weeks past the date of settlement for the house we want to bid for.
    And if so, how quickly can you get bridging approved?

    • Default Gravatar
      darrylJune 15, 2015

      Our home for some reason is not selling. We have already paid deposit on another home and must settle within 2 months and therefore must bridge to settle. Our home, which we own outright is worth more than $1,000,000.

      We need to bridge $500,000 for up to six months. Is this possible and what would be the interest rate today?

      Thanking you in advance, Darryl

    • finder Customer Care
      BelindaJune 16, 2015Staff

      Hi Darryl,

      Thanks for your enquiry.

      On this page, you’ll find a number of lenders that offer bridging finance home loans where you can compare the interest rates offered.

      Most lenders will offer bridging loans for no longer than 12 months.

      To discuss your options, it would be best that you contact a mortgage broker or lender directly.

      Thanks,
      Belinda

    • finder Customer Care
      ShirleyApril 9, 2014Staff

      Hi A,

      Thanks for your question.

      This depends on the terms of the sale. It’s probably best to speak to the agent about your situation before bidding because if you can’t make the contract subject to conditions, then you may have to break contract.

      Cheers,
      Shirley

  6. Default Gravatar
    MaddogApril 7, 2014

    What is the likelihood of someone who previously defaulted on his low document mortgage for 100% of the value of his house and sold his house to prevent bank from foreclosing obtaining bridging finance. He has no assets apart from a car and still owes creditors money.

    • finder Customer Care
      JacobApril 8, 2014Staff

      Hi, Maddog.

      This is extremely difficult to say. However, defaults of this manner are reflected on a credit file. Obtaining finance with a default listing on credit file is something which needs to be discussed with the lender as it’s at their discretion as to provide finance or not.

      Thanks for your question.

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