Bridging Home Loans
Buy Your New Home First & Sell on Your Timeline
Buying and selling rarely happen at exactly the same time.
A bridging home loan can help you purchase your next home before your existing property is sold.
This can give you more time to prepare, market and sell your current home without relying on perfectly aligned settlements.
At My Finance Consultants, we assess your equity, expected sale proceeds and ongoing borrowing requirements.
We then compare suitable bridging options and structure the finance around your budget, property plans and preferred timing.
How Does a Bridging Home Loan Work?
Bridging finance is a short-term lending arrangement covering the period between purchasing your new home and selling your existing property.
During this period, the lender considers the debt associated with both properties.
Once your current home sells, the net sale proceeds are generally applied against the bridging debt.
The remaining balance becomes the ongoing home loan, often referred to as your end debt.
Bridging periods vary between lenders and circumstances. Residential bridging arrangements commonly provide several months to complete the sale.
Depending on the lender, some or all interest may be capitalised rather than paid monthly during the bridging period.
Capitalised interest is added to the loan balance, increasing the amount ultimately repaid.
Understanding Peak Debt & End Debt
Peak Debt
Your peak debt is generally the highest amount owed while you temporarily hold both properties.
It can include your existing home loan, the new purchase and eligible purchasing costs.
Your available savings and other contributions may reduce the amount required.
The lender calculates peak debt using its own bridging and valuation policies.
End Debt
Your end debt is the estimated loan remaining after your existing property is sold.
The lender generally deducts your existing mortgage and estimated selling costs from the expected sale proceeds.
Those net proceeds are then applied against the bridging debt.
Lenders may use a conservative sale-price estimate rather than the full anticipated selling price.
Your actual end debt may therefore be higher if your property sells for less than expected.
We model both the temporary peak debt and expected end debt before recommending a structure.
Equity, Repayments & Bridging Costs
Do You Have Enough Equity?
Your available equity is an important part of a bridging application.
The lender will consider your current property's lender-assessed value, existing debt and expected sale proceeds.
It will also consider the purchase price of your next property and your available cash contribution.
Not all property equity is automatically available to borrow.
Maximum LVRs, valuation policies and other restrictions vary between lenders.
Where available, we may arrange an upfront lender valuation to provide a clearer indication of your equity position.
Repayments During the Bridging Period
Bridging repayment arrangements differ between lenders.
You may need to make repayments during the bridging period.
Alternatively, the lender may allow eligible interest to be added to the loan balance temporarily.
Capitalising interest can reduce immediate cash-flow pressure but increases your debt.
Interest continues to accrue until the existing property is sold and the bridging balance is reduced.
Our Mortgage Repayment Calculator can help estimate repayments on your expected ongoing loan.
Include the Complete Cost of Moving
Your budget should include more than the purchase price of your next home.
Selling costs can include agent commission, marketing, conveyancing and property preparation.
Purchasing costs can include stamp duty, legal fees, inspections and registration charges.
Removalists, insurance and temporary holding costs should also be considered.
Use our Stamp Duty Calculator, Buying Power Calculator and Borrowing Power Calculator as an initial guide.
Benefits & Risks of Bridging Finance
Potential Benefits
Bridging finance can allow you to purchase before selling and act when the right property becomes available.
It may reduce the need for temporary accommodation, storage or moving twice.
You can also remain in your current property while preparing for settlement or completing your move.
Having more time to sell can help avoid structuring your purchase around an exact same-day settlement.
Risks to Consider
Bridging finance increases your debt while both properties are held.
Your current home could take longer to sell than expected or achieve a lower sale price.
This can increase interest costs and leave you with a higher end debt.
Property holding costs also continue during the bridging period.
A bridging loan should therefore be based on realistic sale assumptions and manageable ongoing repayments.
The required sale timeframe should also be understood before you proceed.
Our Bridging Home Loan Process
Review Your Position
We discuss your current property, existing mortgage, new purchase and preferred timing.
We estimate your available equity, likely sale proceeds and complete purchasing costs.
Model the Bridging Structure
We calculate your potential peak debt and expected end debt.
We also consider more conservative sale-price scenarios and the impact of accumulated interest.
Compare Suitable Lenders
We compare suitable options from our panel of more than 40 lenders.
Bridging policies can differ significantly between lenders.
We assess valuation policies, serviceability requirements, bridging periods, interest arrangements, rates and fees.
Application & Valuation
We prepare the application and coordinate the required financial and property documents.
We also arrange lender valuations and manage additional information requests.
Approval, Purchase & Sale
Once approved, we coordinate the lending requirements for your new purchase.
We remain involved while your existing property is sold and the bridging debt is reduced.
Your solicitor or conveyancer manages the legal sale and purchase transactions.
Alternatives to Bridging Finance
Bridging finance is not the only way to upgrade.
Selling before buying can provide greater certainty about your available deposit and final home loan.
You may also negotiate a longer settlement period to create additional time between transactions.
A simultaneous settlement can allow your sale proceeds to fund your new purchase on the same day.
In some circumstances, available savings or equity may provide another way to manage the deposit before settlement.
The most appropriate option depends on your equity, borrowing capacity, sale timing and tolerance for financial uncertainty.
We compare the alternatives before recommending bridging finance.
Frequently Asked Questions
What Is a Bridging Home Loan?
A bridging loan is short-term finance that may allow you to purchase your next property before selling your current home.
The loan is generally reduced once your existing property sells.
How Long Can I Have a Bridging Loan?
The available bridging period varies between lenders and loan structures.
Your existing property generally needs to be sold within the lender's approved timeframe.
An extension should not be assumed.
What Is Peak Debt?
Peak debt is generally the highest amount you owe while both properties are temporarily held.
It can include your existing loan, new property finance and eligible costs.
What Is End Debt?
End debt is the loan expected to remain after your existing property has been sold.
This usually becomes your ongoing home loan.
Do I Need Equity to Obtain Bridging Finance?
Generally, a suitable equity position is important.
The lender will assess your existing property's value, mortgage balance, expected sale proceeds and new purchase.
Serviceability and other lending criteria also apply.
Do I Make Repayments During the Bridging Period?
It depends on the lender and loan structure.
Some arrangements require repayments, while others may allow eligible interest to be capitalised temporarily.
What Happens if My Home Sells for Less Than Expected?
A lower sale price may leave you with a higher end debt.
It can also affect your ability to satisfy the lender's approved bridging structure.
We use realistic and, where appropriate, conservative sale assumptions when assessing your options.
Does Bridging Loan Pre-Approval Guarantee Finance?
No. Bridging approval remains subject to the lender's valuation, credit assessment, property requirements and other conditions.
Your financial circumstances must also remain acceptable through to settlement.