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How Do Bridging Loans Work

How Do Bridging Loans Work? A Bridgit Exclusive Guide
If you’ve been shopping around for a new home or holding off while trying to sell your current home, you’ve likely asked yourself this question at least once: How do bridging loans work?

Bridging loans, also known as bridge loans or bridge financing, are a short-term financing type that’s designed to bridge the financial gap between selling your current property and buying a new one.

Open bridging loans have no pre-agreed loan settlement date (meaning your property is still on the market), while closed bridging loans have one (meaning you’re in the process of finalising the sale of your property).

Specifically, a bridge loan typically pays off your current mortgage plus facilitates the purchase of a new home, before you sell. Your bridge loan is then settled by the proceeds of your property sale, with any remaining balance and accrued or unpaid interest paid by you over a period of time. In Australia, the bridging period of an open bridging loan ranges from six to twelve months.

In the dynamic property market, bridging loans offer opportunities to individuals looking to purchase property or manage expenses while waiting on the sale of their current home.

It’s also exactly where Bridgit can help, as a bridge financing specialist dedicated to helping Australian homeowners not just save on various property transitioning costs but also capture opportunities as they come.

Disclaimer: The opinions expressed in this article are strictly for informational purposes and should not be taken as financial advice or recommendations. Views are subject to change without notice at any time.
Owner-occupied
Investment

Residential Bridging Loan

Buy now, sell later

No monthly repayments
Set-up fee from 0.79%
Min $300K, max $8M

Variable Bridge Rate

We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
i

8.24

%
p.a.
Comparison rate^

8.33

%
p.a.

Bridge Rate from

We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
i

8.24

%
p.a.
Comparison rate^ from
All rates are variable

8.33

%
p.a.
Apply now
Up to 12 month loan term
Up to 80% LVR
Downsizers, upsizers, retirees

Residential Bridging Loan

Buy now, sell later

No monthly repayments
Set-up fee from 0.79%
Min $300K, max $8M

Variable Bridge Rate

We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
i

8.74

%
p.a.
Comparison rate^

8.84

%
p.a.

Bridge Rate from

We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
i

8.24

%
p.a.

Stay Rate1 from

7.29

%
p.a.
The Bridge Rate applies at the start of the loan term. After the existing properties are sold and there is a residual loan balance remaining, the Stay Rate1 is applied.
We offer an introductory rate for the introductory period of the loan term which includes a 1% discount.
i
Comparison rate^ from
All rates are variable

7.44

%
p.a.
Apply now
Up to 12 month loan term
Up to 80% LVR
Downsizers, upsizers, retirees

Get 24 hour approval

Apply nowSchedule a call

Why buy before you sell with Bridgit?

No income verification

We assess loans based on property equity and asset position.

No monthly repayments

No monthly repayments or fees for the duration of the loan term

No double mortages

We’ll pay your existing mortgage, so you don’t have to worry about two mortgages at once.

Save on temporary living

Move into your home sooner and avoid short-term rental, storage and moving costs.

No missed opportunities

Don’t miss out because of slow processes, unlock your property equity in 24 hours.

Apply nowSchedule a call

Trusted by customers
who Bridgit

Customer Service at its best.

Everyone I dealt with at Bridgit was helpful and responsive. Candice (BDM) checked in with me regularly to make sure everything was going smoothly and Andrew kept me in the loop. I recommend Bridgit highly.
- Sue Farnham

Going above and beyond for results

The priority that was placed on this file and constant updates was truly appreciated. Thank you for using common sense and finding a solution for our client’s needs on an oddly zoned security.
- Nicole Fox

Great Team

During the stressful times of obtaining Finance, the BRIDGIT Team came to thefore. We are most grateful for their advice and support.
- MTW

The team at Bridgit were remarkably talented

The team at Bridgit were remarkably talented and understands the pressing issues the situation demands. I cannot thank them enough for stepping up to a life saving situation for customers.
- Jehan Fernando

We are so happy we chose Bridgit

We are so happy we chose Bridgit over a bank. Tom, George and Ken assisted us all the way. They explained everything and made the process easy and stress free. We cannot recommend Bridgit highly enough.
- Felicity F

Definitely worth a try

If you're thinking about getting a bridging loan I'd recommend giving Bridgit a try. I found Bridgit to be way more efficient than the big banks. The communication was great too.
- Michael
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Get 24 hour approval with Bridgit

01

Submit application

Apply online and receive 24 hour approval. Tell us some details about yourself and see how much you can borrow.

02

Accept the offer

Accept your loan offer by making a small upfront deposit and progress your application to the next stage.

03

Purchase your property

Apply online and receive 24 hour approval. Tell us some details about yourself and see how much you can borrow.

*Subject to the loan scenario and outgoing lender processes onrefinance (if applicable).

04

Sell

Sell your existing property and pay down your Bridgit loan. No rush, you have up to 12 months.

Apply NowSchedule a call
Frequently Asked Questions (FAQ)

How much can I borrow with a bridging loan?
Here are some common factors that generally determine the amount you can borrow so you don’t have to keep wondering, ‘How does a bridge loan work?’ or ‘How does a bridging loan work?’:

    • The equity in your current home. Equity is the difference between your property’s value and what you owe on any mortgage or loan. The more equity you have, the higher the amount you could potentially borrow.
    • End debt or peak debt. Your end debt is the total amount of debt you will have at the end of the bridging period, calculated by adding your existing mortgage balance to your new property's value plus any other accrued interest or fees.
    • Serviceability. Some lenders may provide special conditions or restrictions depending on your property, its current state, or where it’s located. These special conditions may reflect the borrower’s individual circumstances as well. It’s best to consult with your lender if your circumstances require special considerations before submitting your loan application.

Online lenders can also be more flexible with their pricing with a bridging loan, meaning you could access more favourable solutions, such as no monthly repayments or waived early exit fees. For instance, Bridgit offers a no monthly repayments with no early exit fees (set-up costs are separate).

Investing in real estate can take some time to get used to, especially when faced with questions like, ‘How to apply for a bridging loan?’ or ‘How do bridging loans work?’ for the first time. At Bridgit, we will show you the benefits of bridge financing, making your journey to a new home simpler.

How do bridging loans differ from regular mortgages?
Generally speaking, bridging loans can be used for a variety of property types. As part of the answer to ‘How do bridging loans work?’, there is a difference between a commercial bridging loan and a residential bridging loan, each with a separate set of requirements.

That being said, how do bridging loans work for residential properties? Residential properties are the most common use for bridging loans, as they can help cover the financial gap between selling your current home and purchasing a new one, thus minimising the hassle and additional cost of signing a lease on a rental and multiple moving fees when selling first.

It’s always best to consult with a financial advisor or a specialist like Bridgit regarding what your loan terms mean for your financial future. Whether you’re a retiree seeking a change in lifestyle or a growing family seeking a larger home, we’re here to simplify real estate financing for you.

Bridgit: The Future of Bridging Loans in Australia
Among the vast landscape of Australian finance, Bridgit stands out among the many options available for people looking to move into a new home for various reasons. Established in 2021, Bridgit came to be in response to a lack of options regarding the topic of ‘bridging loans Australia’.

Since our launch, we have been providing a solution tailored for today’s homeowners looking to answer questions like, ‘How do bridging loans work?’ or ‘What is a bridging loan Australia?’ Our goal is to empower Australians like you to unlock the value of your property and purchase your dream home while waiting for your current property to sell.

Bridgit’s technology-oriented approach also aims to provide you with modern lending experiences by eliminating the tedium and long waits associated with traditional lending. As a result, homeowners no longer need to put their dreams on hold and can instead confidently take the next step in their property journey.

From favourable bridging loan interest rates to the opportunity of converting your property’s existing equity into liquid funds, Bridgit is here to help you move forward with your dream home even while it’s still on the market.

Don’t miss the opportunity to claim your dream home by waiting too long. The answer to ‘How do bridging loans work?’ is right here at Bridgit; apply for a bridging loan with us today!

Bridging essentials

What is Bridging Finance & How does it work?
Is a type of bridge finance?
Who owns bridging finance?
What is bridging finance Australia?
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Disclaimer
‍
Eligibility and approval is subject to standard credit assessment and not all amounts, term lengths or rates will be available to all applicants. Fees, terms and conditions apply.

1 The Stay Rate will only apply if a repayment is made from the sale of Outgoing Properties (or another repayment method approved by us, at our discretion) and the repayment reduces the Amount You Owe to an amount that is equal to or less than your Residual Loan Balance.
‍
^Comparison rate is calculated on a $150,000 secured loan over a 25-year term. For Upsizer loans, a Bridge Rate applies for the first 12 months, followed by a Stay Rate thereafter. For Downsizer loans, only the Bridge Rate applies. WARNING: This comparison rate is true only for the example provided and may not include all fees and charges. Different loan amounts, terms, or fee structures will result in different comparison rates. For interest-only periods, your loan balance does not reduce, meaning you may pay more interest over the life of the loan. Set-up fee from 0.79% and government charges apply.