A bridging loan lets you buy your next home before the current one has sold. The lender temporarily carries both properties, then the sale proceeds pay down the debt. Used well, it removes the worst part of upgrading: the gap between two settlement dates.
How it works
During the bridge (usually 6 to 12 months) you hold a "peak debt": the old loan plus the new purchase price and costs. Most lenders capitalise the interest, meaning you make no repayments on the bridge while it runs. When the old home sells, the proceeds reduce peak debt to your ongoing "end debt", which becomes a normal home loan.
What lenders check
- End debt serviceability: you must comfortably afford the final loan. Some lenders also test the peak.
- Equity: bridging works best when you hold solid equity in the current home, usually 50% or more across both properties.
- Saleability: a realistic price on a property that will actually sell within the bridge period.
The costs and the risks
Bridging rates are typically close to standard variable rates now, not the penalty pricing of years past. The real risk is time: capitalising interest grows the debt every month the old home does not sell, and an optimistic price estimate can turn a comfortable end debt into a tight one. Build the numbers on a conservative sale price, not the agent’s brochure figure.
Alternatives worth comparing
- Selling first with a long settlement or rent-back from the buyer.
- A standard equity release if you can service both loans outright.
- Making the purchase subject to sale (weaker offer, but zero bridge risk).
See the full upgrader playbook, including sell-first vs buy-first.
Read the upgrading guide →Only some lenders do bridging well, and their policies differ sharply. Nathan can tell you in one call whether your numbers bridge safely.