When a bridge is the right tool
- Buying before selling. You have found the next place and your current one is not sold, or is sold but settles later.
- A settlement that is about to fail. Finance fell through, a valuation came in short, or a co purchaser walked. A bridge buys the weeks needed to fix it properly.
- Releasing equity quickly for a business purpose. Stock, a tax bill, a contract, an opportunity with a deadline.
- Holding an asset until the right exit. Finishing a project, settling a sale, or waiting for a bank refinance to land.
Bank bridging and private bridging are different animals
Some banks offer bridging for owner occupiers moving house: cheaper, slower, and assessed on your income as well as the properties, often with the expectation the old home sells inside six to twelve months. Private bridging is faster and assessed mainly on the security and the exit, which is why it is used where timing is tight, the purpose is business or investment, or the borrower does not fit bank policy. Both have their place. The question is whether the calendar allows the cheaper option.
How a bridge is structured
- Security. Usually a first mortgage over one property, or over both the one being sold and the one being bought. More security means a lower loan to value ratio on each and a better price.
- Term. Short, with a date. Months, not years, matched to the exit.
- Interest. Charged interest only, and often prepaid or capitalised rather than paid monthly, so there is no new repayment to meet while the bridge runs.
- The advance. Because interest and fees may be held back, the cash that reaches you is less than the loan amount. Work backwards from the cash you need on settlement day.
- The exit. The sale, the refinance, or the receivable, with a date and evidence.
When you own both properties at once, you owe both loans plus the costs. Lenders look at that peak debt against the combined value of the properties, and at what is left after the sale settles. Work out the figure before you commit, not after.
Most private lending is for a business or investment purpose, which sits outside the National Credit Code. That is part of why it moves fast. It also means the consumer protections attached to a regulated home loan do not apply: the loan is short, the cost is higher, default interest can be steep, and the security can be enforced quickly. Read the terms, take legal advice, and be sure of your exit before you sign.
What it costs
Price depends on the security, the loan to value ratio, the term and how solid the exit is. Expect an interest rate quoted monthly or annually, an establishment fee, the funder's legal costs and a valuation, and sometimes an exit fee. Ask three questions before you sign: what is the total cost if the bridge runs its full term, what happens if the exit is late, and can it be repaid early without penalty.
The mistake that costs people money
Taking a bridge without a dated, evidenced exit. A bridge is designed to end. If the sale is not on the market, or the refinance has not been assessed by anyone, the bridge is not a bridge, it is an expensive loan with a deadline attached. The fix is unglamorous: price the property to sell inside the term, get the refinance started the day the bridge settles, and build in a buffer.
Common questions
How long does a bridge run?
Usually a few months to around a year, set to the exit. Longer bridges exist, and the longer the term the more the exit has to be evidenced rather than hoped for.
Do I make repayments on a bridge?
Often not. Interest is commonly prepaid from the advance or added to the balance, so there is nothing to pay monthly and the balance grows instead. That is convenient and it is not free: it is why the total cost matters more than the rate.
What if my property does not sell in time?
Talk to the funder early. Extensions are common and are priced; default interest if you simply run past the date is not. The earlier the conversation, the better the outcome.
Can I bridge if I have had credit problems?
Often yes, where the security and the exit are strong, because a private funder is lending against the property and the way out rather than your credit score. Say it up front: it will be found anyway and it rarely stops a deal.
Sources
- ASIC Report 814, Private credit in Australia (22 September 2025), checked 26 October 2026
- Reserve Bank of Australia Bulletin, March 2023: Non-bank lending in Australia and the implications for financial stability, checked 26 October 2026
- ASIC: FAQs, does the credit legislation apply?, checked 26 October 2026
- National Credit Code, section 13 (business purpose declaration), National Consumer Credit Protection Act 2009 Schedule 1, checked 26 October 2026
General information only, not credit advice. It doesn’t take your objectives, financial situation or needs into account. Rules and figures change; check them, or talk to Joshua, before you rely on them.