Bridging FinanceMakeMyLoan brokers compare dozens of lenders and owe you a Best Interests Duty — your bank doesn't.
Bridging finance solves a timing problem: the home you want to buy is available now, but the money is locked up in the home you have not sold yet. A bridging loan lets you settle the purchase first and repay the bridge when your current home sells. Used with honest numbers and a realistic view of your sale, it can spare you the misery of selling under pressure, moving twice, or losing the right property. Used with wishful thinking, it stacks a large debt on a clock. The difference lies in three numbers — peak debt, end debt and the bridging period — so let us start there.
Peak debt is the total you owe during the bridge: your existing home loan, plus the full cost of the new purchase — price, transfer (stamp) duty, legal and moving costs — less any cash you contribute. For a while, you effectively carry both properties at once, and peak debt is the size of that load. Lenders cap peak debt against the combined value of both properties; in general terms, maximum LVRs on bridging are conservative, and the cap must still hold if the valuations come in soft.
End debt is what remains once your current home sells and the net proceeds are paid off the bridge. This becomes your ongoing home loan, assessed like any other loan — your income must service it under normal serviceability rules, with lenders typically assessing your capacity at a buffer above the actual rate. If the projected end debt is more than you could borrow outright, the structure does not work, no matter how good the bridge looks.
A useful discipline: calculate end debt using a genuinely conservative sale price — not the agent's appraisal on a sunny day — and subtract selling costs, agent's commission and any payout figures. If the numbers only work at an optimistic sale price, they do not work.
Most bridging loans capitalise the interest on the bridge: instead of making repayments on the peak debt, the interest is added to the loan balance each month and repaid when the property sells. That is what makes bridging livable — few households can service two full loans at once — but be clear-eyed about the mechanics: you are paying interest on a growing balance, so the cost compounds, and every extra month of bridging increases the end debt. Bridging rates are also generally somewhat higher than standard home loan rates, in general terms. Some lenders capitalise everything; others require you to keep servicing your existing loan or the projected end debt during the bridge. Which structure you get shapes your monthly cash flow for the whole bridging period, so confirm it before committing rather than at settlement.
Lenders set a maximum bridging period — commonly around six months when you have bought an existing home and sold-to-be, and often around twelve months where a new home is being built. Two features of the period matter more than its length:
The strongest bridging positions are the ones that barely need the period: property already on the market or ready to list immediately, realistically priced, in an area where comparable homes are actually selling.
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Every bridging risk is a version of the same event — the sale takes longer, or fetches less, than the plan assumed. When that happens, three pressures arrive together: capitalised interest keeps compounding the peak debt, the bridging deadline approaches with the lender's expectations attached, and price reductions cut directly into your end-debt position. The households that get hurt by bridging are almost always the ones that priced the old home on hope, in a slow market, with no buffer in the numbers.
Before you commit, pressure-test the plan: What happens if the sale takes nine months instead of three? If the price lands 10 per cent under the appraisal? If both happen? You want the honest answer to be "the end debt is bigger and we are annoyed" — not "we cannot hold the loan." Ask the lender the same questions: what happens at the end of the bridging period, what are their expectations on marketing, and what does an extension require. Our repayment calculator can help you see what different end-debt outcomes look like as an ongoing loan.
Bridging is one answer to the timing problem, not the only one:
The right choice usually falls out of two questions: how sellable is your current home really, and how replaceable is the one you want to buy? A very sellable home and a rare purchase points toward bridging; the reverse points toward selling first. You can read more about how these loans are structured on our bridging finance page.
Bridging assessment concentrates on the exit. Expect the lender to look at conservative valuations of both properties, your equity position (bridging works best with strong equity in the current home), the marketability of the property being sold, your capacity to service the end debt under standard buffers, and a credible sale plan. Documentation is otherwise standard — identification, income evidence and statements, as with any pre-approval — and it is worth having the structure assessed before you make an offer, not after.
Bridging structures, maximum periods and capitalisation rules vary meaningfully between lenders, and the right structure depends on your equity, your income and how realistic your sale plan is. Get in touch before you commit to buying or selling — mapping peak debt, end debt and the timeline first is what keeps a bridge from becoming a plank.
Peak debt is the total owed during the bridge — your existing loan plus the full cost of the new purchase, including duty and costs. End debt is what remains after your current home sells and the net proceeds repay the bridge; it becomes your ongoing home loan. Lenders cap peak debt against both properties' values and must be satisfied your income can service the end debt.
Often not on the bridge itself — most bridging loans capitalise the interest, adding it to the balance monthly and repaying it from the sale proceeds. That helps cash flow but means the debt grows every month the property remains unsold. Some lenders instead require you to keep servicing your existing loan or the projected end debt during the bridge, so confirm the structure upfront.
Commonly up to around six months for buying an existing property, and often up to around twelve months where a new home is being built, depending on the lender. The period starts at settlement of your purchase. If the sale has not happened by the deadline, extensions are at the lender's discretion and may come with conditions such as an agreed price reduction or sale strategy.
The pressure builds from three directions: capitalised interest keeps growing the debt, the lender's deadline approaches, and price reductions eat into your end-debt position. Lenders will typically work with you on an extension or a revised sale strategy, but ultimately they can require the property to be sold. This is why conservative pricing and a realistic view of your local market matter before you start.
Selling first is the financially safer sequence — you know your exact position and buy with certainty — at the cost of possibly renting and moving twice. Bridging suits buyers with strong equity, a genuinely sellable home, and a purchase worth securing now. If the numbers only work with an optimistic sale price, selling first is usually the honest answer.
This article is general information only and doesn't consider your personal objectives, financial situation or needs — it isn't personal credit advice, and lending criteria, rates, fees and government schemes change. Before acting, speak with a licensed MakeMyLoan broker or credit representative who will assess your circumstances and provide a credit guide before any credit assistance is given.
