Buying before you sell: how bridging works

When the timing doesn’t line up

Sometimes you find a property you want to buy before your current home is sold. Bridging finance may provide a temporary funding arrangement between the purchase and the sale. It is not simply a normal home loan with a different name: the costs, maximum period and exit strategy need careful consideration.

Peak debt and end debt

Peak debt generally refers to the higher total debt during the overlap. End debt is what remains after the sale proceeds are applied. For illustration, an existing loan of $400,000 plus $900,000 of new funding gives $1.3 million before any additional costs or capitalised interest. If net sale proceeds of $750,000 are applied to the debt, $550,000 would remain under those assumptions.

The sale price is an assumption

The illustration above is not a borrowing-capacity estimate. Actual structures differ. Sale costs, property valuations, required equity, fees and interest can change the numbers. A lower sale price or a longer selling period could leave you with more debt or a funding shortfall.

Understand the interest treatment

Some facilities require repayments during the bridging period. Others may allow interest to be added to the balance. Capitalised interest still has a cost and can increase the amount owed. Ask how interest is calculated, when it must be paid and what happens at the end of the bridging period.

Build a practical exit strategy

Work through the expected listing and settlement timetable, a realistic sale-price range and a contingency if the property takes longer to sell. Get legal advice on both contracts. It may also be worth comparing selling first or negotiating settlement dates rather than assuming bridging is the only path.

Frequently asked questions

Is bridging finance available to everyone?

No. Equity, affordability, property details, exit plans and lender policies all matter. A lender may not offer a suitable facility for your circumstances.

What if the home doesn’t sell on time?

The options depend on the facility terms and lender. Additional costs, a required repayment or other consequences may arise. Understand the maximum period and discuss the downside scenario before committing.

Talk before making your offer

Blake can help you identify the lending questions to address before buying ahead of a sale. All figures here are illustrative only. Lending is subject to eligibility, lender assessment and approval; obtain legal and financial advice relevant to your situation.