Bridging finance explained

Bridging loans cover the gap between buying the new home and selling the existing one. Six-month windows are typical; the cost can be small or significant depending on equity.

10 min readBy Sarah ChenStage 3 of 5

Bridging is rarely the right call when your equity is thin, and rarely a problem when it’s thick.

How bridging actually works

Lender values both properties.
Calculates Peak Debt (existing loan + new purchase + costs).
Calculates End Debt (after sale of existing).
Charges interest on Peak Debt for the bridging period (often capitalised).
On sale, sale proceeds reduce Peak Debt to End Debt.
You continue with End Debt as a normal home loan.

WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Comparison rates are calculated on a secured loan of $150,000 over 25 years for home loans and a loan of $30,000 over 5 years for car and personal loans, unless the lender states another basis. Business loans and equipment finance for a business purpose have no mandatory comparison rate.