Bridging Home Loans Sydney
In Need of a Bridging Loan in Sydney?
If you are buying before selling in Sydney, a bridging loan covers your existing mortgage, new purchase price, stamp duty and sometimes the loan interest over a 6 to 12 month period. Holding double debt carries risk in Sydney’s market if your timeline shifts but our brokers can explain how bridging loans work, stress-test your peak debt scenarios, and secure competitive options at no cost. (Government and Lender fees and charges may apply).
Types of Bridging Loans we can help with
What is Our Bridging Loan Process?
If you’re buying or building before you sell, speak to us about obtaining a bridging loan. We’ll establish your borrowing capacity, explain the pros and cons, and help you gain easy access to a range of lender types, while keeping the process simple.
Step 1: Initial Assessment & Goal Setting
We’ll learn about your property goals and plans for transition, explore your financial situation and examine suitability for a bridging loan structure. We’ll also review different possible scenarios regarding sale and purchase timelines and valuations. We will work out all the numbers for your peace of mind.
Step 2: Valuation, Borrowing Capacity & Loan Structure
We’ll help you engage a property valuer for your current home, calculate your borrowing capacity, and size repayments under different loan structures and outcomes. At this point, we’ll make sure a bridging loan is a good option, or help you look at alternatives.
Step 3: Comparing the Market for Competitive Bridging Loan Options
We’ll review a range of bank and non-bank bridging loans available in Sydney, to find products that suit your situation. We’ll present competitive options to you in a simple way that makes comparison easy.
Step 4: Managing Your Loan Through the Transition Period
Your loan will change as it moves from the peak debt period to the end loan stage. We’ll help manage your bridging payments, and plan for loan reduction after the existing property is sold. Moving forward, annual reviews will ensure your loan remains a good option as circumstances change.
Meet Our Expert Team
Buying before you’ve sold can leave an awkward gap. Our Sydney team helps you bridge it, arranging finance that carries you through the overlap without the timing keeping you up at night.
Sydney Loan Calculators
The overlap between buying and selling is easier to plan when the figures are clear. Our free calculators help you estimate repayments and borrowing power through the bridging period.
Frequently Asked Questions
A bridging home loan is a short-term finance option designed to cover the financial gap when you buy or build a new house before selling your existing property. It temporarily combines the debt of both properties, plus purchasing costs like stamp duty, over a standard 6 to 12-month period. Under our preferred structure, the interest on the bridging portion accumulates (capitalises) so you don’t face double repayments, and the loan automatically transitions to a standard mortgage once your original home settles.
Yes, the safest way is with a bridging loan, which covers the new property purchase price, stamp duty and associated costs. A bridging loan uses the estimated values of your current and new properties as security for the loan.
Bridging loans typically last 6 to 12 months. The shorter period is sometimes applied to house purchases, whereas a 12-month period is more likely applied to property builds. Generally, you must fully repay the loan within this timeframe, though lenders may consider extensions on a case-by-case basis.
Under our preferred bridging loan structure, you are only required to make principal and interest repayments on your projected end-debt amount while the bridging period is active. The interest accrued on the remaining bridging portion is automatically built into the loan balance (capitalised) monthly, completely protecting your ongoing household cash flow during the transition.
If your existing property does not sell within the bridging timeframe, the loan term expires, and the lender will require an urgent review of your financial position. To avoid penalty interest rates or a forced liquidation, the bank will typically expect you to significantly reduce your property’s listing price to achieve an immediate sale. In extreme circumstances where an agreement cannot be reached, the lender reserves the legal right to take control of the asset and sell it to recover the peak debt.
A bridging loan can be used if you are looking to upgrade or downsize, but have not yet sold your existing home. If you’re upgrading, it’s important to ensure you’ll be able to afford the new mortgage once the bridging period has ended. If you are downsizing, the sale of your old home may cover the new mortgage entirely, allowing you to take out a no-end-debt bridging loan. If you’re looking to upgrade by renovating your existing property, a renovation loan may be a suitable financing option.
The interest on a bridging home loan is calculated based on your total required loan amount, including your current loan balance, the purchase price of the next property and the associated purchase costs.
While your end-loan is automatically established from day one, you can absolutely choose to refinance or restructure your mortgage after the bridging period ends. For example, if your previous home sells for more than expected and your final end-debt is lower, we can instantly look to renegotiate your interest rate or restructure your loan features to take full advantage of your improved financial position.
Borrowing capacity for bridging loans is different from normal home loans because it can depend entirely on how much equity you have available, rather than just your ability to meet repayments. Bridging loans are typically assessed more conservatively due to their short-term nature, and are secured against both your existing property and the new one. How much you can borrow will depend upon the estimated value of both properties.
A bridging loan must cover the new property purchase, stamp duty and other purchase costs. Our preferred method is detailed below and only requires the borrower to make repayments on the loan they will have at the end, once the home sale has gone through and this really helps cash flow:
Current home value: $700k
Current outstanding mortgage: $200k
Value of next home: $900k (for example)
Stamp duty & purchase costs on a $900k purchase: Approx. $40k
Amount required to buy the next property + all the costs: $900k + costs $40k approx = $940k required
Total lending needed to buy before the current home is sold: current mortgage $200k + funds required for next property $940k = $1.14m
Loan-to-value ratio first calculator before factoring in capitalised interest: $1.14m/$1.6m=71.25% (must be under 80%)
Total lending is broken into 3 parts for our calculation: the Peak Debt, capitalising loan amount and the End Debt.
Peak Debt: $1.14m + the interest for a year on the bridging portion (below) est $38k approx = $1.178m
End Debt: $1,178m Peak Debt – $575k net sale proceeds = $603k (Where net sale proceeds = $700k sale price – $105k valuation buffer – $20k selling costs)
Capitalising loan amount (bridging portion): $1.178m Peak Debt – $603k end debt = $575k
Note: a deposit is usually required when purchasing a property; your broker will consider that when determining overall feasibility.
If the interest amount means you breach the 80% threshold, the borrower will need to be comfortably able to afford repayments on the entire amount borrowed during the bridging period (often interest-only). That amount can be quite substantial, so sometimes bridging is not practical and a borrower should sell first with a long settlement before signing a contract to buy the next property.