Found your next home before selling your current property? A bridging loan could help you fund the purchase while you arrange the sale. It can make the timing easier, but it also means carrying more debt for a period.
This guide explains how bridging loans work in Australia, what affects the cost and the questions to ask before buying.
Contents
What is a bridging loan?
A bridging loan is short-term property finance that covers the gap between buying another property and receiving the proceeds from selling your existing one. This is also how ASIC’s Moneysmart defines bridging finance.
It may be worth considering when you want to upsize, downsize or relocate and the purchase needs to settle first. The sale of your existing property is normally the main repayment strategy.
How does bridging finance work?
The exact structure depends on the lender, but the process generally involves:
- Assessing your position: The lender reviews the properties, equity, finances and proposed sale.
- Funding the purchase: Approved finance allows the new purchase to settle before the existing property sale settles.
- Managing the overlap: You follow the agreed repayment arrangement while holding both properties.
- Applying sale proceeds: At settlement, the required sale proceeds reduce or clear the debt.
- Managing any remaining loan: If debt remains, it is repaid under the agreed ongoing home loan arrangement.
For a broader overview of funding a purchase, explore LoanBrix’s home loan options.
Peak debt and end debt explained
These terms describe your borrowing before and after the sale.
What is peak debt?
Peak debt is the highest combined debt during the bridging period. Ask whether the calculation includes financed purchase costs, loan fees and any interest added to the balance.
What is end debt?
End debt is the amount remaining after the required sale proceeds are applied to your loans. This is the debt you need to manage through your ongoing home loan.
Your end debt depends on the actual sale proceeds, selling costs and borrowing costs. Use a conservative sale estimate when planning. Ask your broker to calculate the result if the property sells for less or takes longer to settle.
Bridging loan interest, repayments and costs
Repayment arrangements differ between lenders. Some require interest payments during the bridging period. Others allow interest to be added to the balance, known as capitalised interest.
For example, CommBank’s bridging loan guide describes demonstrating the ability to make interest-only payments on total debt. Westpac’s published bridging loan information describes capitalised interest with no repayments during the bridging period. These are examples of different structures, rather than a recommendation of either lender.
Capitalised interest is still a cost: adding it to the balance increases what you owe. Check which part of the borrowing receives this treatment and whether another loan still requires repayments.
What costs should you allow for?
Ask for an itemised estimate covering:
- Interest during the expected bridging period and a longer sale scenario.
- Application, valuation, legal, settlement and discharge fees where applicable.
- Purchase costs, including transfer duty and conveyancing.
- Selling costs, including agent fees and marketing.
- Overlapping property expenses and moving costs.
- The rate, fees and repayments on any ongoing loan.
NAB’s bridging finance guide discusses loan fees and overlapping housing expenses. Compare the total cost over your likely sale timeframe rather than choosing on the advertised rate alone.
Who can qualify for a bridging loan?
Having equity does not automatically mean you qualify. Approval also depends on lender policy, acceptable security, your financial position and a credible repayment strategy.
What documents might you need?
Prepare a folder containing:
- Identification.
- Current mortgage statements.
- Evidence of income.
- Details of living expenses and other debts.
- Evidence of available savings.
- Information about your existing property and intended purchase.
- The purchase contract and any signed sale contract, when available.
Your broker can confirm the lender’s exact document requirements.
Also prepare answers to three practical questions: When will the existing home be listed? What sale price is realistic? What will you do if the sale takes longer?
Benefits and risks of bridging loans
Potential benefits
Bridging finance may let you secure a suitable home before your existing sale settles. Depending on timing, it could reduce temporary accommodation and storage needs and give you more flexibility when coordinating the move.
Risks to plan for
A delayed sale can increase interest costs. A lower sale price can leave you with more ongoing debt than expected. The loan also has a deadline: an extension is not guaranteed.
CommBank’s guide warns that failure to sell within its specified term can lead to default and possible loss of property. Understand the consequences in your own contract before committing.
Before buying, ask your broker to test a slower sale and a lower price together. Keep a separate moving and household expense budget so the discussion includes your day-to-day cash needs.
What are the alternatives to bridging finance?
Discuss these options with your broker and conveyancer:
- Sell first: Establish your available proceeds before buying, allowing for temporary accommodation if needed.
- Coordinate settlements: Explore whether the purchase and sale can settle together.
- Negotiate timing: Ask whether a longer purchase settlement or an appropriate contract condition is possible.
- Review existing finance: Assess whether available savings and an approved alternative loan structure can fund the purchase.
LoanBrix can also help review your refinancing options. Any alternative needs its own assessment of affordability, costs and timing.
Frequently asked questions about bridging loans
How long does a bridging loan last?
The lender sets the term. Westpac and CommBank currently publish maximum terms of 12 months for the products linked above. Confirm the deadline for both sale and settlement in your offer.
Do I have to make two mortgage repayments?
It depends on the structure. Some arrangements require interest payments across the borrowing, while others capitalise interest on the bridging portion. Ask for a written repayment schedule covering every loan.
Can I get bridging finance if my home is mortgage-free?
A mortgage-free home may provide equity, but approval still depends on the proposed borrowing, property assessment and lender requirements.
Can I use a bridging loan to downsize?
Potentially. Westpac describes a no-end-debt arrangement where sale proceeds cover the bridging balance, interest and fees. Availability depends on the lender and your circumstances.
What happens if my bridging loan is about to expire?
Contact your lender and broker early. Any extension or refinance needs assessment; do not assume it will be available. Westpac states that an extension may be subject to credit criteria.
Speak with LoanBrix before buying your next home
Before making an offer, bring LoanBrix your current loan balance, estimated property values, intended purchase price and expected timeline. We can help compare suitable lender options and explain the proposed borrowing, costs and repayments.
Explore our bridging loan service to discuss buying before you sell.
General information only. Finance is subject to lender approval, eligibility and terms. Product information checked on 21 October 2026 and may change.
