The timing gap between selling your current home and settling on your next one is one of the most stressful parts of upsizing. A bridging loan solves this by financing your new purchase before your existing property sells — so you can move when the right home comes up, not when the timing is perfect.
A bridging loan is a short-term loan that covers the period between buying your new property and selling your existing one. Most lenders offer bridging terms of 6 to 12 months. During this period you typically only pay interest, keeping repayments manageable while you hold both properties.
The lender calculates your peak debt — the combined value of your existing mortgage plus the new purchase — and assesses whether you can service this amount. Once your existing property sells, the proceeds reduce the loan to your ongoing mortgage on the new home.
A closed bridging loan is used when you have already exchanged contracts on your existing property and have a known settlement date. Because the sale is certain, lenders are more comfortable and rates are typically lower.
An open bridging loan is used when your existing property has not yet sold. This carries more risk for the lender and is assessed more conservatively. Lendology advises on which structure suits your situation and which lenders offer the most competitive terms for each type.
The key risk with bridging finance is if your existing property takes longer to sell than expected, or sells for less than anticipated. You need a realistic assessment of your current property's value and a clear plan for what happens if the sale is delayed.
Bridging loans also typically carry higher rates than standard home loans. The goal is to minimise the bridging period — getting your existing property on the market quickly after purchasing gives you the best outcome. We model the full cost scenario for you before you commit.
Bridging finance suits buyers who have found the right next home and do not want to lose it while waiting for their current property to sell. It also suits those who want to move into the new home before the sale completes, avoiding the need for temporary accommodation.
Alternatives include making your offer conditional on the sale of your existing property, or selling first and renting temporarily. We walk through the full picture with you — including the costs and risks of each approach — so you can make the right decision for your situation.
Most bridging loans run for 6 to 12 months. Some lenders offer up to 24 months in specific circumstances. The goal is always to minimise the bridging period to reduce interest costs.
No. You can apply for an open bridging loan before your existing property is sold. However, you will need a realistic valuation of your current property, and the lender will assess your ability to service peak debt.
Your lender may extend the bridging period, though this is at their discretion. This is why having a realistic sales strategy in place from the outset — and pricing your existing property correctly — is essential. We factor this into our advice.