Will you need a bridging loan to buy your next property?

Bridging loans allow you to own 2 properties at once – the home you just bought and the home you need to sell to pay for it. Learn how bridging loans work.

The thought of having to take out bridging finance is enough to send a chill down many homebuyers’ spines. Bridging, or “in-between”, loans allow you to own two properties at once – the home you just bought and the home you need to sell to pay for it. So a bridging loan effectively buys you time. Rather than having to offload your property urgently to pay for some or all of your debt, you get the chance to sell in circumstances that can maximise your sale price. For the risk-averse, the thought of financing two mortgages is enough to send them to therapy. They may have bought a property before selling first, motivated by emotion (“We love this house”) or misplaced optimism (“Of course we’ll sell our house quickly”), and possibly against their better instincts. But getting a bridging loan is not nearly as expensive or as scary as it used to be. For some, a little uncertainty is a small price to pay to have their dream property straight away.

How bridging loans work

Determining how much you can borrow comes down to a simple formula. Add the amount you owe on your home loan with the value of your new home, and then subtract the value of your current home. Throw in the usual buying and selling costs such as stamp duty and the result is the principal of your new bridging loan. If your current mortgage is relatively small you have a distinct advantage. The more equity you have in your current home, the less you will need to borrow. A bridging loan in Australia can be paid back as interest-only and lenders set a time limit, typically six months, for you to sell your current property (although they may grant you an extension if a sale falls through, for instance). This means if you sell within a month, you only have to pay interest for that month, and the rest of the debt is capitalised for up to nine months. What you’re left with once the sale goes through and the proceeds are put towards the loan is your new mortgage, which reverts to a principal plus interest arrangement (or remains interest-only, if you prefer). The good news is that taking out a bridging loan is not as expensive as it was before deregulation, when banks assessed in-between loan applicants as high-risk clients. Fees and interest rates are generally in-line with a standard, non-discounted variable rate loan, though applicants are required to pay for home valuations (although one might be paid by the lenders). Undoubtedly, the easiest way for someone to organise bridging finance is through their current lender, which should be familiar with their financial history and repayment record. But many borrowers see these circumstances as a chance to refinance and look for a better rate or service. Phillip Jiang, from unohomeloans.com.au, has been a mortgage coach for 15 years. He says bridging loans are not for everyone, and often counsels clients to look for alternatives. “I’ve often told clients the best thing is to sell the property and buy another one, otherwise it’s too complicated, too stressful,” he says. As with refinancing, those looking to take out a bridging loan should seek trusted advice and not borrow anywhere near the maximum allowed, which is generally 80% of the property value. You should know going in that bridging finance rates are typically higher than normal loans. And, Jiang says they should also be prepared for potential complications. He cites the example of a couple that were paying a mortgage on a flat in Neutral Bay, on Sydney’s north shore, which was valued at $950,000. Based on this valuation, they bought a coastal property for $600,000. When they put their flat up for auction, it only sold for $780,000, leaving them with a significantly greater debt than expected. “At the settlement of their existing property, they had to increase the loan amount the bank approved because the sales proceeds were just not enough to pay out the bridging portion,” he says. “Before a client looks at a bridging finance loan, they need to speak to the agent to see how long it will take to sell their property for their reserve price. They also need to keep in contact with their solicitor. If they can buy first, sell later within a stretch of two weeks, a solicitor can make a simultaneous settlement possible. If the first two options are impossible, then they have to go to the third option, which is applying for a bridging loan.” Jiang says nervous sellers can often apply for a bridging loan as a backstop. “One of my customers applied for bridging finance and it was approved. On the first weekend she put her existing property on the market, it was sold on the spot. She came back to me and said, ‘Look, I don’t need bridging finance anymore’. So she didn’t proceed with the application.” Yes, in some circumstances, bridging finance can even bring peace of mind.

Top tips

Don’t rush into buying first, selling later – seek trusted advice before applying for a bridging loan. Be realistic about what your property is actually worth – make sure you don’t rely on selling at the full valuation price. It may be possible to avoid a bridging loan if property settlement dates can be aligned.


UNO We’ll help you get a better deal on your home loan. Search, compare and settle your home loan in the one place. Get started at unohomeloans.com.au.Book in a quick call with our customer care team.Book a call in with UNO

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles


What our customers are saying

Sally Mackenzie
February 19, 2024
We chose Uno Home Loans from their impressive web site knowing we were going to find it hard, on many fronts, to qualify for a home loan. We were incredibly fortunate to be assigned Mike Parsons as right from the get-go, despite the complexities, he hit the ground running for us. He was incredibly knowledgeable, with years of experience but what was immediately apparent and impressive was that he was totally invested in getting us over the line, doing absolutely everything possible, including working around the clock. Despite it being a relatively small loan in the order of things, Mike never missed a beat, getting docs ready, following up and answering every request from the proposed funder immediately. He kept us informed on progress the minute anything happened, and again if anything needed to be done, he was right on it. In short, we highly recommend Uno, and Mike, knowing what a remarkable job he did, over many weeks, to get us our loan. He got us a great deal, with far better rates than we expected, so we couldn't be happier. In fact, without doubt, you'd be hard pressed to find a more personable, sharp, hard working, dedicated professional who clearly prides himself on getting his customers standout results.
Read more
February 13, 2024
Scott and his team were just A-mazing. We felt supported through the whole process with the greatest quality and care. Every question answered right in time, or even before we asked. The process was smooth and we got the best outcomes we could have wished for.
Read more
Angela Biddle
February 6, 2024
Our mortgage recently came up for renewal, and with interest rates skyrocketing we were looking for ways to minimise the impact. Michael and his team were proactive and attentive. Michael spent time with us to understand our circumstances. He found mortgage options that worked with our current financial situation and longer investment plans. He presented clear options, providing guidance where needed. He and his team were helpful and responsive - streamlining the process and keeping us updated through the negotiations. In the end, Uno did the heavy lifting and secured a significantly better rate than our current bank offered, all with friendly, personal service. We would highly recommend UNO Home Loans.
Read more
Fotis Bikas
January 15, 2024
I cannot help but congratulate Scott Wilkinson of UNO Home Loans for being an absolute credit to both his company and the entire loans industry. Scott is a truly rare gem of a broker in that he will not only go the extra mile to achieve for each customer the very best deal, but his knowledge of all and sundry within the industry is unsurpassed (you will see what I mean if you speak to him). Additionally, Scott has a clear passion for imparting his wealth of information with each customer, whereas the conversation with most other brokers would simply be over if they could not get you the best deal. For me, Scott Wilkinson of UNO Home Loans stands head and shoulders above the competition and I feel privileged to benefit both from his expertise and professionalism whenever it is time for a refinance or new loan.
Read more
Tomoharu Matsui
January 11, 2024
Michael Parsons helped me a lot when it's difficult to establish my capabilities in loan.
Read more
Gillian Kearon
January 9, 2024
I highly recommend Mike Parsons as a mortgage broker. I couldn't fault the service provided by UNO. Thanks Mike!
Read more
Taner T
December 20, 2023
Thank you Eren Tan for the amazing service and support. Our Loan was a little tricky and complex for other lenders but Eren managed to get it over the line in record time. His professionalism and dedication to our needs was exceptional. If you need a Loan no matter how complex your situation, make sure you contact Eren at UNO Home Loans.
Read more
Karaipu Brown
December 20, 2023
Buying & selling a house at the same time is very stressful but Scott Wilkinson from UNO home loans made sure we knew what was happening & took most of the stress away. He always kept us up to date and if we had a concern or wanted clarification on something we were able to call him, if he didn’t know the answer straight away he will find out and contact us back.. now we are enjoying our new house and turning it into a home :)
Read more
Chris Anderson
December 18, 2023
Just completed my first loan with UNO which was so much easier than with other other brokers I have used in the past. Our broker MIKE PARSONS always had time for me and broke things down for me in the simplest of terms and was very patient with my silly questions and my constant changing of plans. I wish I had used them in the past as I wouldn't be in the situation I'm in now. Can't recommend them highly enough. Thanks UNO and Thanks MIKE 😊
Read more
Stephen Broomfield
December 11, 2023
To be able to recommend Scott Wilkinson for your mortgage broker was a privilege. We had deals fall through but Scott supported, guided and stuck with us, proper partnership. The whole team at UNO helped us and supported us right through to after settlement. Made sure everything was correct and how we are progressing. Communication was amazing and straightforward and easy to understand. Transparent. We can not Recommend Scott and the team as Uno high enough. Use UNO with confidence.
Read more
Tarek Hussain
December 6, 2023
Can't thank Amy enough for her hard work, dedication and determination on getting multiple loans completed for me. I wouldn't hesitate in recommending Amy and the Uno team to any of my associates. Will definitely be back in the near future!
Read more
November 3, 2023
If you’re looking for a trustworthy, thorough, reliable & knowledgeable Mortgage Broker then you must call Anita Callaghan! I can’t even imagine how stressful this process would’ve been without her. Anita went above and beyond to make sure she answered every question, responded to every text (even on weekends/after hours), and followed up on every detail to ensure we had all the info we needed. Anita is a true people person who is warm, empathetic, kind and supportive. You can tell she loves helping people and loves what she does, which is probably why she’s so good at it! Can’t thank you enough Anita, or recommend you more highly! You’re the best!
Read more