What is a bridging loan?

Buying before you sell

Bridging finance lets you buy your next home before your current one is sold, so you are not forced into a rushed sale or a rental in between. It suits some buyers better than others, and the numbers matter.

Bridging finance or a simultaneous settlement?

With a simultaneous settlement you sell and buy on the same day, and the sale proceeds pay for the purchase. It is simpler and avoids carrying two properties, but it depends on both contracts lining up. Bridging finance gives you time and flexibility, at the cost of carrying more debt for a period.

Peak debt and end debt

Lenders look at two numbers:

• Peak debt is what you owe while you hold both properties: your current loan plus the full cost of the new home, plus any interest added during the bridging period.
• End debt is what is left once your current home sells and the proceeds pay down the loan. Lenders assess whether you can afford this ongoing loan.

An example

Say your current home is worth $1,000,000 with $400,000 owing, and you buy your next home for $1,300,000 with about $60,000 in purchase costs. Your peak debt is about $1,760,000. If your home then sells for $1,000,000 and selling costs are about $25,000, roughly $975,000 goes to the loan, leaving an end debt of about $785,000 plus any interest added during the bridging period.

This example is illustrative only. Actual figures depend on your property values, sale price, costs and the lender.

Things to plan for

• Interest during the bridging period. Many lenders add it to the loan rather than asking for repayments, which means you pay interest on interest.
• The bridging term. Lenders set a time limit to sell, commonly between 6 and 12 months. A slow sale can mean extra costs or a lower price.
• Valuations. Both properties are valued. A lower valuation on your current home increases your end debt.
• Your selling plan. We work with your agent so the timing of the sale and the purchase is realistic.

Patrick is regularly at local open homes and auctions and works closely with agents across Brisbane's inner north, so we can help you plan the sale and the purchase together.

Reviewed by Patrick Moore, Director, Loan Market Clayfield, November 2026. This is general information only and does not take into account your personal circumstances. Lender policy varies.