Stage 3 of 5
Bridging finance explained
Buying Your Next Home
Stage 3 / 5 · Bridging
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.
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 example 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 based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.