Broker guide
Bridging Loan and Bridging Finance Requirements
Assess a bridging loan through linked purchase and sale dates, peak and end debt, valuation, servicing and a documented exit from bridging finance.
- Published
- Updated
A bridging loan is short-term finance that lets your client buy their next home before the current home sells, with the sale proceeds repaying the temporary debt. Lenders assess it on two figures: peak debt while your client owns both properties, and end debt once the sale settles.
Bridging finance is only as sound as its exit. The lender is relying on a sale that hasn’t happened yet, so the sale price, the sale date and the fallback if either slips decide whether the loan works.
Map the Transactions
A bridging loan means your client borrows against both properties for a set period, then repays the extra debt from the sale of the old home. Moneysmart defines bridging finance as short-term finance covering the period between buying a new property and selling the existing one.
Start the file by recording three dates and three balances. New funds are needed on the purchase settlement date, and the debt only falls when the sale settles. The existing loan balance tells you how much of the sale price is already owed.
- Purchase: contract date, settlement date, price and the purchase costs your client wants to borrow.
- Existing home: current loan balance and lender, plus whether that loan must be refinanced to the bridging lender.
- Sale: listing status, expected price, expected settlement date and selling costs.
How a Bridging Loan Works in Australia
Here is the sequence in a simple upgrade, using fictional figures. Your client owes $300,000 on a home they expect to sell for $900,000, and they have contracted to buy a $1,200,000 home that settles in six weeks.
On the purchase settlement date, the lender funds the new home while the old loan stays in place. Your client now owes money on both properties, which is when temporary funding is needed. When the old home settles, the net sale proceeds go to the lender first and reduce the debt to the ongoing home loan.
CommBank’s bridging page, as at October 2026, describes the same order. The client buys, owns both properties for up to 12 months, then uses the sale proceeds to pay off the bridging loan and keeps the remaining home loan.
Personal Bridging Loans and Other Uses of the Word
A personal bridging loan is the household version of this transaction. Your client buys the next home to live in or rent out before the current home sells, and the sale of that home is the repayment event. The word personal describes the borrower and the purchase, not an unsecured loan, so both properties normally secure the debt.
Two other credit tasks share the word. A business bridge funds commercial security, development or trading, with a business exit, which the business bridging loan guide covers. Loans for a person holding a bridging visa are a separate question about residency, explained in the bridging visa personal loan guide.
Peak and End Debt
Peak debt is the most your client owes during the overlap between the purchase and the sale. End debt is what remains after the net sale proceeds have been applied.
In the fictional upgrade, your client borrows the full $1,200,000 price plus $70,000 of assumed purchase costs. Peak debt is $1,570,000, made up of the $300,000 existing loan and $1,270,000 for the purchase. Against combined property values of $2,100,000, that is a peak loan-to-value ratio (LVR) of about 74.8%.
The old home sells for $900,000, and $25,000 of assumed selling costs leaves $875,000 of net proceeds. End debt is $1,570,000 less $875,000, which is $695,000, or about 57.9% of the new home’s value.
If the old home sells for $850,000 instead, net proceeds fall to $825,000 and end debt rises to $745,000. Every dollar the sale price falls short lands in the ongoing loan.
| Figure | Sale at $900,000 | Sale at $850,000 |
|---|---|---|
| Peak debt | $1,570,000 | $1,570,000 |
| Net sale proceeds | $875,000 | $825,000 |
| End debt | $695,000 | $745,000 |
| End debt LVR on the new home | 57.9% | 62.1% |
These figures leave out interest. With a lender that capitalises interest, peak and end debt both grow each month the sale takes. The bridging loan cost guide works through the interest, fees and a sale delay.
Bridging for Construction
Construction changes the shape of peak debt because the new home’s debt grows in stages. Your client owns the existing home while the build is drawn down. Peak debt therefore arrives at the final progress payment if the old home hasn’t sold by then.
Size the bridge on the land plus the full build contract, plus any capitalised interest on the drawn amounts. If the existing home sells part-way through the build, the net proceeds reduce the debt before the later draws, and the peak is lower.
Lenders treat construction bridging differently, so the build timeline narrows the lender choice:
- Bendigo Bank’s bridging target market determination, effective 5 October 2023, allows up to 12 months for a dwelling to be constructed and six months for an established property.
- As at October 2026, Westpac’s bridging page and St.George’s relocation loan page accept an owner-occupier buying vacant land to build with a building contractor.
- ANZ doesn’t allow a construction loan as the bridging component, according to its bridging guide as at October 2026. A construction loan can only form part of the residual, ongoing debt.
A build that runs past the bridging term leaves your client with two debts and no sale proceeds. The construction loan requirements guide covers the progress payments and builder documents.
Prove the Exit
The lender’s confidence in repayment rests on the sale contract and valuation, the sale timeframe and the fallback plan. The stronger each piece of evidence is, the less the lender is relying on an estimate.
Contract of Sale and Valuation
A signed, unconditional contract of sale fixes the price and the settlement date. Without one, the expected sale price comes from an agent’s appraisal and the lender’s own valuation, and the lender sizes end debt on that estimate.
ANZ’s bridging guide, as at October 2026, says property value means ANZ’s valuation, which may differ from the price paid. Expect the lender to value both properties.
A low valuation on the new home raises the LVR, and a low valuation on the old home raises the expected end debt. The bank property valuation guide explains how a valuer’s figure feeds the loan.
Sale Timeframe
Match the expected sale date to the bridging term with room to spare. A home that isn’t yet listed needs preparation, a campaign and a settlement period, all inside the term.
Check when the clock starts. CommBank’s guide, as at October 2026, counts 12 months from the day the bridging loan is funded. Under ANZ’s guide, the old home must be sold and settled within 12 months of settlement on the new home.
Fallback Plan
Write down what happens if the home sells late or for less. CommBank’s guide says an unsold property after 12 months may be treated as a default. CommBank can then charge a default rate and step in to assist with the sale.
CommBank’s worked example shows the shortfall case. The old home sells for $280,000 against a $300,000 bridging loan, and the $20,000 difference is added to the ongoing loan, subject to approval. Test whether your client’s end debt still services at a lower sale price before you lodge.
Westpac’s page, as at October 2026, says an extension past 12 months may be subject to credit criteria. Treat an extension as a request the lender can decline, not as the plan.
Lender Conditions
Lenders publish different terms for the same household bridge. The comparison below applies one set of facts: individual owner-occupier borrowers, an established home, no signed sale contract yet and an upgrade that leaves end debt.
The sources are each lender’s bridging page or guide as at October 2026. Bendigo’s rows come from its target market determination effective 5 October 2023 and its September 2021 bridging fact sheet.
| Lender | Maximum bridging term | Interest during the bridge | Published servicing test | Property and borrower restrictions | Sale contract before approval |
|---|---|---|---|---|---|
| CommBank | 12 months from funding | Interest only, charged monthly | Interest-only repayments on the total debt during the bridge | Individuals, non-trading companies and trusts can apply. New customers need at least $250,000 of post-bridging debt | Not listed. The sale must settle within the term |
| ANZ | 12 months from new home settlement | Interest only, charged monthly | Repayments on both homes during the bridge, and savings may be requested | Up to 80% of the new home’s value. Non-customers refinance the current home to ANZ first | Not listed. The sale must settle within the term |
| Westpac | Up to 12 months, with the rate rising 1.00% after the first three months | Capitalised, with no repayments | Not stated on the product page | Owner-occupiers only. No investment purchases or trust lending | Not listed |
| St.George | Up to 12 months | Capitalised, with no repayments | Not stated on the product page | Owner-occupiers only. No investment purchases or trust lending | Not listed |
| Bendigo Bank | Six months established, 12 months construction | Capitalised | Standard lending criteria on the end debt | Individuals only. Peak debt, including capitalised interest, can’t exceed 80% of combined values | Not listed |
Servicing Both Debt Stages
Lenders that collect interest during the bridge test whether your client can carry both debts now. CommBank’s guide asks the client to show they can make interest-only repayments on the total debt. ANZ’s guide asks for repayments on both homes and may ask for savings to cover them.
Lenders that capitalise interest put the weight on end debt. Bendigo’s fact sheet applies standard lending criteria to the proposed end debt and caps peak debt, including capitalised interest, at 80% of the combined property values.
Run servicing on the end debt after the capitalised interest is added, at the sale price you are confident of. The loan serviceability guide explains the servicing test itself.
Fallback Options and Access
When no lender’s terms fit, the main fallbacks are selling first, aligning settlements or keeping the old home as an investment. ANZ’s guide names same-day settlement as one alternative for clients who aren’t eligible for bridging finance.
Check the channel too. Bendigo’s target market determination lists its branches, contact centre and its own relationship managers and bankers as the channels for this product, with no broker channel listed. Deposit, capacity and application requirements for each structure are in the bridging loan eligibility guide.
Bridging rules sit in each lender’s policy, so terms such as the bridging period, capitalisation and trust lending differ across your panel. Bulma answers lender policy questions across 52+ lenders and quotes the policy wording behind each answer, which you can keep in the file notes.
Open, Closed and Short-Term Structures
Open and closed bridging loans differ by how certain the sale and repayment dates are. Aussie’s bridging guide, updated 16 March 2025, defines a closed bridging loan as one where the borrower has signed a contract of sale and has a confirmed settlement date.
An open bridging loan, in Aussie’s definition, is used when the borrower hasn’t sold and has no confirmed settlement date. The lender is relying on an expected price and an expected date. Aussie notes that lenders generally view closed bridging loans as lower risk because the timing is known.
| Structure | Sale status | What the lender relies on |
|---|---|---|
| Closed bridge | Contract signed, settlement date confirmed | The contract price and settlement date |
| Open bridge | Not sold, no confirmed settlement date | The valuation, the appraisal and the bridging term |
Short-Term Bridges
A short-term bridge covers a known gap of days or weeks, such as a purchase that settles before a contracted sale. The exit evidence is the sale contract, and the main risk is the buyer failing to settle. A short-term bridging loan still needs the sale to settle inside the term, so check the contract’s settlement date against it.
Refinancing Into a Bridge
A bridge starts with a refinance when the existing loan sits with another lender. ANZ’s guide says a client who isn’t an ANZ customer must refinance the current home to ANZ before the bridging loan can be set up. CommBank’s guide shows the existing home loan becoming the bridging loan.
That adds a discharge from the old lender to the transaction sequence. The refinance requirements guide covers that step. A bridge can also end in a refinance, as in CommBank’s shortfall example, where the unpaid balance moves into the ongoing loan.
Renovating Before the Sale
ANZ’s guide lists needing time to renovate the current home before selling as one reason to use a bridging loan. The renovation sits inside the bridging term, so the sale date moves out by the length of the works.
The exit evidence changes too. The lender values the home as it stands, so a higher post-renovation price is still an estimate until a contract is signed. Plan the works, campaign and settlement inside the term, and work out how the renovation is paid for.
Test Fast, Quick and Instant Bridging Claims
A fast, quick or instant bridging loan claim usually describes the first response, not funded money. Separate the indicative answer from credit approval, then from completed loan documents and settlement.
An indicative answer is a lender’s or provider’s early view on whether the deal could work. ANZ’s guide describes pre-approval as an approval subject to conditions being met, including security that is satisfactory to ANZ. Formal approval follows once those conditions are checked, then the loan documents are signed and the loan settles.
Dependencies Before Funds Are Available
Funds can’t be released until each of these is complete:
- Valuations of the new home and the existing home, accepted by the lender.
- A payout figure and discharge arrangements for the existing loan, if it moves to the bridging lender.
- Sale evidence, such as the agent’s appraisal, the listing or a signed contract.
- Identity verification for every borrower and guarantor.
- Signed loan documents, mortgage documents for both properties and the settlement booking.
No standard completion time applies, because each dependency runs on its own timetable. A quick approval doesn’t shorten a valuation, a discharge or a settlement date. The home loan settlement guide covers that last stage.
Interest Only or Capitalised Interest
Read “interest only” in a bridging offer for who pays the interest and when. As at October 2026, CommBank and ANZ charge interest monthly and the client pays it during the bridge. Westpac’s page for the same month names its repayment type “Interest Only Capitalised” and requires no repayments during the bridging period.
Capitalised interest isn’t paid in cash, so it adds to the debt and comes out of the sale proceeds. Before you describe a facility as interest only, check whether the residual debt still fits after capitalised interest and a lower sale price. In the fictional example, a $50,000 lower sale price alone lifts end debt from $695,000 to $745,000, and capitalised interest adds to that.
