A bridging loan lets you buy your next home before your current one sells, so the purchase does not hang on the sale date. We structure the bridging period and the end loan so your finances are set up cleanly for whatever comes next.
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A bridging loan covers the gap between buying your next home and selling your current one. For a period you hold both properties, and the lender secures the combined lending against both.
Once your current home sells, the sale proceeds repay the bridging portion. What remains is a standard home loan on the new property.
Most bridging loans follow the same pattern:
Peak debt is the total you owe while you hold both homes. End debt is what remains after the sale settles and the proceeds are applied. Lenders assess both, and the end debt is the loan you live with.
In our bridging loan case study, a couple bought a $1,670,000 home before selling their current home, expected to sell for $1,300,000:
| Measure | Peak, before the sale | End, after the sale |
|---|---|---|
| Debt | $1,914,344 | $690,000 |
| Property securing the debt | $2,970,000 | $1,670,000 |
| LVR | 64.45% | 41.31% |
They put $608,353 of savings toward the purchase. The bridging loan itself was $1,105,000, worked off an expected sale price in line with the valuation.
Lenders handle bridging interest in different ways, and policies vary and change:
Capitalised interest eases cash flow, but the balance grows each month the sale takes. That cost is paid from your equity, so a longer bridging period means a higher end debt.
Bridging periods are often six to 12 months from settlement of the new home, depending on the lender and whether you are buying an established home or building. Many lenders do not extend the period beyond their maximum.
If the sale takes longer, or sells below the estimate, the consequences usually include:
We work the figures off a conservative sale price and allow for a slower sale, so the plan still holds if the market softens.
Where bridging does not fit, selling first, a longer settlement or a subject-to-sale clause may suit you better.
Lenders generally test your income against the end debt, not the peak. You still need to show the bridging period is manageable, and income that is temporarily lower needs clear evidence.
In the case study, one partner was on maternity leave and the other's year-to-date income was below his new base salary. The lender accepted $191,037 of income for servicing, supported by:
Parental leave is a common reason families move before selling. Our page on debt recycling for growing families covers how income changes affect the wider plan.
A couple with two newborns bought their next home for $1,670,000 before selling their current home, with one partner on maternity leave until January 2027. Peak debt was $1,914,344 at 64.45% LVR, falling to $690,000 at 41.31% LVR once the current home sells.
Read the Case Study →Bridging debt used to buy your home is private borrowing, so the interest is generally not deductible. That matters if you plan to start debt recycling once the dust settles, because the end debt should be set up so a later strategy starts clean.
The ATO looks at what borrowed money is used for, not which property secures it. Our guide to selling your home mid-strategy covers how an existing investment split can survive a move. Your registered tax agent confirms the tax treatment.
Tell us where you are and what you want to do next. We will tell you what the lending side looks like, including whether debt recycling fits later.
Request a Call With Alex →We map both figures using a conservative sale price, with capitalised interest allowed for.
Bridging periods, interest treatment and income policy differ, so we compare them against your timing and income.
We present leave, new roles or recent pay rises with the evidence a credit assessor needs.
We structure the end debt with clean loan splits and an offset, ready for a later strategy if you choose one.
Peak debt is the total you owe while you hold both your current home and the new one. End debt is what is left once your current home sells and the proceeds are applied. Lenders assess both, and the end debt becomes your ongoing home loan, so it needs to fit your income comfortably.
It depends on the lender. Many lenders capitalise the interest on the bridging portion and expect normal repayments on the end debt. Some ask for interest-only repayments instead. Capitalised interest helps cash flow, but it adds to the balance each month until the sale settles.
Bridging periods are often six to 12 months, and some lenders allow longer when you are building rather than buying an established home. Policies vary and change, and many lenders do not extend beyond their maximum, so we plan the sale timing around the lender's limit.
The shortfall adds to your end debt. If the higher end debt no longer fits your income or the lender's limits, you may need to contribute more cash or restructure. We work the figures off a conservative sale price to leave room for a softer result.
Bridging debt used to buy your own home is private borrowing, so the interest is generally not deductible. Deductibility depends on what the borrowed money is used for, not which property secures it. Your registered tax agent confirms how this applies to you.
Generally yes, once the sale settles and the end debt is in place. Setting the end debt up as its own home split with an offset makes it simple to add a separate investment split later. Your financial adviser recommends whether and how to invest.
How an investment split can survive a sale and purchase.
Read more → SERVICEHow we keep home and investment borrowing separate.
Read more → CALCULATORCheck your loan-to-value ratio before and after a sale.
Read more →
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