Get the Finder app 🥳

Track your credit score, free

Free

Open Bridging Loans

If you've found a new home but have yet to sell your old property, an open bridging loan could be the solution.

Updated

Fact checked

Sometimes the process of selling an old property and buying a new one doesn't go as smoothly as it could. While it would be ideal to have your current home sold before settling on a new one, you may find you have to move quickly to secure your dream property. In circumstances like this, an open bridging loan can fill the gap.

What is a bridging loan?

A bridging loan covers the gap between the sale of properties. If you haven't settled the sale of your current property before settling on your new home, a bridging loan prevents you from having to pay two mortgages simultaneously.

Bridging loan lenders calculate what's known as your peak debt, which is the amount you owe on your current property plus the value of the property you're buying. Then they subtract the likely sale price of your current property to determine the size of bridging loan you'll need. Most lenders will only lend on 80% of the value of your peak debt. Here's an example of how it works:

  • Amount owing on current home loan: $250,000
  • Value of new property: $700,000
  • Peak debt: $950,000
  • 80% of peak debt: $760,000
  • Likely sale price of old property: $600,000
  • Ongoing balance: $160,000

During the bridging period, you'll be charged interest on the ongoing balance of the loan while you continue to pay your current home loan. Most lenders will capitalise this interest so you don't have to make regular repayments. Instead, when your home sells, your bridging loan will convert to a standard home loan for your new property and the interest you've accrued will be capitalised onto it.

Bridging loans come in two varieties: open and closed. Whether you need an open bridging loan or a closed bridging loan will depend on where you are in the process of selling your old home.

What is an open bridging loan?

An open bridging loan is one with no set time period in which to sell your property. While a closed bridging loan has a predetermined time frame in which your property must be sold, typically six months, an open bridging loan does not.

When would I use an open bridging loan?

You would use an open bridging loan if you have yet to exchange contracts on the sale of your current property, or if you expect settlement to be delayed.

How do I get an open bridging loan?

Open bridging loans are more difficult to be approved for than closed bridging loans, because they carry more risk for the lender. Before approving an open bridging loan, a lender will want thorough details on the property you're purchasing and your current property, along with ample evidence that your current property is being actively marketed.

Because open bridging loans are more difficult to obtain, you should consider speaking to a mortgage broker to help guide you through the process. You can fill out the form below to be contacted by an Aussie Home Loans expert. Or you can look at the table below the form to find a wider selection of bridging finance options.

Aussie Home Loans Logo

Enter your details and get a free consultation with an expert broker from Aussie.

By submitting this form, you agree to the Finder Privacy and Cookies Policy and Terms of Use

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2020 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the Aussie privacy policy.

After entering your details a mortgage broker from Aussie will call you. They will discuss your situation and help you find a suitable loan.

  • A comparison of home loans from multiple lenders.
  • Expert guidance through the entire application process.
  • Free suburb and property reports.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 8 years running (2013-2020)

Compare more bridging finance options

Data indicated here is updated regularly
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
P&N Bank Bridging Home Loan
5.27%
5.27%
$395
$8 monthly ($96 p.a.)
85%
Bridging loan that lets you borrow up to 85% LVR.
loading

Compare up to 4 providers

Related Posts

Home Loan Offers

Important Information*
Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get up $4,000 cashback for their first application (Other terms, conditions and exclusions apply).

Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I (*now 2.59%, drops to 2.54% on 30 Sep)

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan. This rate will drop to 2.54% p.a on 30 September 2020 for new and existing customers. You can get this rate if you apply today.

Logo for UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate

Take advantage of a low-fee mortgage with a special interest rate of just 2.49% p.a. and a 2.49% p.a. comparison rate.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site