Selling your current home and buying your next one can feel stressful – especially when the timing doesn’t line up perfectly. This is where a bridging loan can save the day

What Is a Bridging Loan?

A bridging loan is exactly what it sounds like – it "bridges" the gap between buying your new property and selling your existing one. Think of it as a short-term loan that helps you secure your dream home without missing out while waiting for your current property to sell.

These loans typically last anywhere from 3 to 12 months, giving you breathing room to sell your existing property without the pressure of rushed decisions or missed opportunities.

How Do Bridging Loans Work?

When you take out a bridging loan, the bank combines the value of your current home loan with the cost of the new property. You’ll usually only make interest payments on the “peak debt” which is the total amount borrowed until you sell your old home.

Once your old home sells, the proceeds are used to pay down the bridging loan, leaving you with just your regular home loan on the new property.

Below is a simple example:

• Your current home is worth $800,000
• You owe $300,000 on your existing mortgage
• You want to buy a new home for $900,000

With a bridging loan, the bank lets you buy the $900,000 property straight away. Your total loan (peak debt) would be $1.2 million ($300k existing + $900k new).

Once you sell your old house and pay off $800,000 from the sale proceeds, your final home loan drops to $400,000 – which becomes your normal mortgage moving forward

When Should You Consider a Bridging Loan?

Bridging loans make sense when:

• You've found your perfect new home but haven't sold your current one
• The property market is moving quickly and you can't afford to wait
• You want to avoid temporary accommodation between properties
• You're confident your existing property will sell within the loan term
• You have sufficient equity in your current home

Things to Keep in Mind

• Interest-only period: Bridging loans are usually interest-only for 6–12 months.
• Valuation matters: The lender will value both your current and new properties.
• Have a sale plan: The sooner you sell, the less interest you’ll pay.
• Talk to a mortgage broker: A good broker will compare lenders and make sure the numbers stack up for you.

Why Speak to a Mortgage Broker

Bridging loans can be a bit tricky, with different lenders offering different terms. Working with a mortgage broker means you get clear guidance, competitive rates, and someone who handles the paperwork so you can focus on your move.