Bridging Loans Australia: The Complete 2025 Guide

What is a Bridging Loan?

A bridging loan is short-term financing that bridges the gap between buying a new property and selling your existing one. In Australia, bridging loans typically run for 6 to 12 months and are secured against property.

Bridging finance solves a common problem: you've found your dream home, but your current property hasn't sold yet. Without bridging, you'd either miss the purchase or face the stress of selling under pressure.

How Bridging Loans Work in Australia

The Basic Structure

You identify a new property to purchase
Apply for bridging finance secured against both properties

Purchase the new property using bridging funds
Sell your existing property within the bridging period

Repay the bridge from sale proceeds and transition to standard finance

Two Types of Bridging Loans

Closed Bridge: Your existing property is already sold with a confirmed settlement date. Lower risk for lenders means better rates.

Open Bridge: Your property isn't yet sold. Higher risk means higher rates, but provides more flexibility.

Bridging Loan Costs in 2025

Interest Rates

Bank bridging loans: 6.5% to 8% p.a.
Non-bank/private bridging: 9% to 14% p.a.

Fee Structure

Application fee: $0 to $600
Valuation fees: $300 to $600 per property

Legal fees: $1,000 to $2,500
Establishment fee: 0% to 1% (more common with private lenders)

Example Cost Calculation

Scenario: Buying a $900,000 home while selling your $700,000 property

Peak debt (both properties): $1,200,000
Bridging period: 6 months

Interest rate: 7.5% p.a.
Interest cost: Approximately $45,000

This assumes maximum exposure. In practice, if you sell within 3 months, costs drop significantly.

Who Offers Bridging Loans in Australia?

Major Banks

Commonwealth Bank
ANZ

Westpac
NAB

Banks offer the lowest rates but require strong financials, existing customer relationships, and often won't lend on properties that have been listed for sale for extended periods.

Non-Bank Lenders

Pepper Money
Liberty Financial

La Trobe Financial
Firstmac

More flexible than banks with faster approvals, but slightly higher rates.

Private Lenders

Private lenders offer the fastest approvals (24-48 hours) and most flexible criteria, ideal when banks say no or timing is critical. Platforms like Introducr connect borrowers with multiple private lenders for competitive offers.

Eligibility Requirements

Bank Requirements

Clean credit history
Sufficient equity in existing property

Income to service peak debt
Property must be appropriately listed for sale

Realistic sale price expectations

Private Lender Requirements

Adequate equity across both properties
Clear exit strategy

Property in acceptable location and condition
LVR typically under 70-75%

Bridging Loan Scenarios

Scenario 1: Upgrading Your Home (NSW)

James and Lisa found a $1.2M family home in Sydney's Inner West. Their current apartment is worth $850,000 with $400,000 owing.

Solution: A bridging loan covers the new purchase while they sell the apartment. With $450,000 equity in their current home, they qualify easily. They sell within 4 months and transition to a standard mortgage.

Scenario 2: Downsizing in Victoria

Margaret, 68, wants to downsize from her $1.1M Melbourne home to a $650,000 apartment. She's mortgage-free but needs to buy before selling.

Solution: Bridging finance secured against her existing home lets her buy the apartment immediately. She sells her house at her pace, avoiding the stress of rental limbo.

Scenario 3: Investment Property Purchase (QLD)

David spotted an undervalued investment property in Brisbane for $520,000. His current investment property is worth $600,000 with $300,000 owing, but bank refinancing will take 6 weeks.

Solution: A private bridging loan settles the purchase in 7 days. David refinances to bank rates once settled, keeping the opportunity he would have otherwise lost.

Risks and Considerations

What If Your Property Doesn't Sell?

This is the primary risk. Mitigation strategies:

Get a realistic appraisal before committing
Have the property sale-ready before bridging

Consider a longer bridging term for buffer
Have a backup plan (price reduction, rental, family help)

Interest Costs Can Accumulate

Bridging interest on peak debt adds up. A 3-month bridge costs roughly half of a 6-month bridge. Sell quickly to minimise costs.

Market Conditions Matter

In a slow market, bridging becomes riskier. In a hot market, you might sell before even needing the bridge.

Alternatives to Bridging Loans

Sell First, Rent Temporarily

Eliminates risk but involves moving twice and rental costs.

Make Purchase Conditional on Sale

Works in buyer's markets but sellers often reject conditional offers.

Home Equity Line of Credit

If you have significant equity, a line of credit might cover the gap at lower rates.

Family Loan

Interest-free but not always available and can strain relationships.

How to Apply for a Bridging Loan

Step 1: Assess Your Position

Current property value and mortgage balance
Target property price and required loan

Realistic timeline for selling
Income and expenses

Step 2: Get Property Valuations

Lenders need formal valuations. Order these early to avoid delays.

Step 3: Compare Options

Get quotes from your existing bank
Check non-bank lenders

Consider private lending for speed or flexibility

Step 4: Prepare Documentation

ID and proof of address
Current mortgage statements

Property contracts (purchase and/or sale)
Income verification (for banks)

Step 5: Apply and Settle

Bank approvals take 2-4 weeks. Private lenders can settle in under a week.

Frequently Asked Questions

How long can a bridging loan last?

Typically 6 to 12 months. Some lenders offer up to 24 months, but costs increase significantly with longer terms.

Can I get a bridging loan with bad credit?

Banks will likely decline you. Private lenders focus more on property equity and may approve bridging with credit issues.

Do I pay interest during the bridging period?

Most bridging loans capitalise interest (add it to the loan balance) during the bridge, so you don't make monthly payments until you transition to standard finance.

What happens if I can't sell in time?

Options include extending the bridging term (with additional costs), reducing your sale price, or refinancing to a longer-term loan if you can service it.

Can I use bridging finance for investment properties?

Yes, bridging works for investment property transactions, not just owner-occupied homes.

Conclusion

Bridging loans serve a valuable purpose in Australian property transactions, letting you secure your next home without the pressure of selling first. However, they're not without cost and risk.

The key to successful bridging is realistic planning: know your property's true value, have it ready to sell, and understand your costs at different timeframes.

For fast, flexible bridging options, Introducr connects you with verified private lenders who can provide quotes within 48 hours—giving you certainty on costs before you commit.