Preparing financially
Bridging finance: buying before you've sold
A short-term, typically more expensive loan that lets you buy before selling — and carries real timing risk if your sale takes longer than expected.
- Bridging finance uses your existing home's equity to fund a new purchase before it sells.
- It converts to a standard loan once your existing property sells.
- It's generally more expensive than a standard home loan.
- The main risk is timing: a slower or lower-priced sale than expected extends the cost.
How bridging finance works
Bridging finance lets you buy a new property before your existing one sells, using the equity in your current home to fund the purchase temporarily. It's typically structured as a short-term loan against both properties, converting to a standard loan (and reducing) once your existing home sells.
The real cost and timing risk
Bridging loans are generally more expensive than a standard home loan, and the biggest risk is timing: if your existing property takes longer to sell than expected, or sells for less than expected, you can be left servicing a larger-than-planned debt for longer than planned. A realistic (not optimistic) estimate of your existing property's likely sale price and timeframe is essential before committing.
Practical checklist
Before committing to bridging finance
- Get a realistic, conservative estimate of your existing property's sale price and timeframe
- Compare the bridging rate and fees against alternatives (e.g. selling first)
- Ask what happens if your property hasn't sold by the bridging loan's end date
Questions for a professional
- What's the bridging rate compared with a standard loan, and for how long does it apply?
- What happens if my existing property doesn't sell within the bridging period?