Bridging loans

Bridging Loans: Buy Your Next Home Before You Sell

A bridging loan lets you buy your next home before you've sold your current one. The lender lends against both properties for a set period, usually up to 12 months, while you sell.

Interest is often added to the loan rather than paid monthly. The sale proceeds then pay the bridging amount down.

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How a bridging loan works

When you buy before selling, the lender combines your current loan and the new purchase into one temporary 'peak debt'. You then have a set period to sell. When the sale settles, the proceeds pay down the bridging portion and you're left with the 'end debt' as a normal home loan.

Benefits

Buy when the right home comes up: in a competitive market, timing can be the difference between buying and missing out.
Less pressure on settlement dates: you don't have to line up both settlements on the same day.
Borrow against both properties: lenders know your total debt will fall once your current home sells.

Risks

Interest is calculated daily and charged monthly, so the longer it takes to sell, the more interest you pay.
If your home sells for less than expected, your end debt will be higher.
Bridging loans usually have a maximum term of 12 months. If you can't sell in that time, the lender may treat it as a default and step in to sell the property.
In a default you could lose your property and still owe money.

What lenders look at

A realistic sale price for your current home, often from an agent's appraisal
Whether you can afford repayments on the end debt
How much equity you have across both properties
Your plan if the sale takes longer than expected

Bridging works best when you have strong equity and a home that is likely to sell within a few months. It isn't suitable or available for everyone, so talk to us first. See also loan types, the property selling cost calculator and the property buying cost calculator.

Frequently asked questions

Do I make repayments during the bridging period?

Often only on the ongoing end-debt portion. Interest on the bridging portion is commonly capitalised, meaning it's added to the loan and paid off when your current home sells. Capitalised interest increases the total you owe.

What is peak debt?

Peak debt is the most you'll owe during the bridging period: your current loan plus the new purchase price and costs, plus any capitalised interest. Lenders assess whether you can manage the end debt after the sale.

What if my home sells for less than expected?

The shortfall stays as part of your end debt, which means higher repayments. That's why a conservative sale estimate, ideally backed by an agent's appraisal, matters before you commit.

Buying before you sell?

We'll work out your peak debt and end debt and check which lenders on our panel can help.

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