Buy the next home before this one sells.

How a bridging loan works: peak debt and end debt.

During the bridge you briefly owe two amounts at once. Peak debt is everything combined: your existing home loan, plus the purchase price of the new home, plus costs like stamp duty, usually with the bridging interest added on top rather than paid monthly. End debt is what's left after your old home sells and the proceeds come off the pile: it becomes your ordinary home loan and has to be serviceable on your income like any other loan.

A worked example: you owe $400,000 on a home that should sell for $900,000, and you're buying at $1,100,000 with about $50,000 of costs. Peak debt is roughly $1,550,000 plus capitalised interest. Your sale clears about $880,000 after agent fees, leaving an end debt around $670,000. The lender's real question is whether you can service that $670,000, and whether the sale assumptions behind it are honest. That's the assessment we build before anything is submitted.

The terms that actually matter.

Bridging terms usually run up to 6 months when you're buying an established home, and up to 12 months when you're building. Most lenders cap total lending around 80% of the combined value of both properties, which is why bridging works best when there's solid equity in the current home. Interest is charged at variable rates and is usually capitalised into peak debt, though you can service it monthly to keep the balance down if cash flow allows.

The honest risks: if the old home sells slower or lower than assumed, the capitalised interest keeps compounding and the end debt lands higher than planned. We stress the numbers with a longer sale window and a softer price before recommending the bridge, and if they don't hold, we'll tell you to sell first instead.

The process and timeframes.

Bridging approvals run on the same machinery as normal home loans, plus two extras: a valuation on each property and a serviceability case for the end debt. Realistically: the numbers and the stress-test with your broker first (a day or two), the application with valuations on both properties (one to two weeks), then approval and settlement on your purchase timeline. If you've already signed a contract, say so immediately: bridging is one of the products where lender turnaround differences matter most, and the shortlist changes when the clock is running.

After you move, the clock runs on the bridge term. We stay on the sale side too: the earlier the old home lists, the less interest capitalises, and if the sale completes early the bridge simply ends early. There's no penalty for beating the deadline.

When bridging is the wrong tool.

Bridging isn't for everyone. If your equity is thin, if the end debt only works at a best-case sale price, or if your market is slow, alternatives usually win: selling first with a longer settlement or a rent-back agreement, negotiating the purchase subject to sale, or using a deposit bond to secure the new place while your sale catches up. Part of the job is telling you which of these your numbers actually support: the answer is bridging often enough that the product exists, and not so often that it should be anyone's default.