A bridging loan is a short-term, secured loan (typically up to 12 months) designed to help borrowers purchase a new property before selling their existing one.
It allows for a smoother transition between homes by using the equity in the current property to fund the new purchase—avoiding the need for temporary accommodation.
Key Features
Loan term: Usually up to 12 months (some lenders allow up to 24 months)
Maximum LVR:
Typically 70%–80% without LMI
Up to 85%–95% with LMI or special lender policies
Security: Both the existing property and the new property are used as collateral (cross-collateralised)
Common Use Cases
Bridging loans are generally used in two scenarios:
Buying a new property while selling an existing one
Building a new property while continuing to live in the current home
Loan Structure Explained
Peak Debt
The total loan amount during the bridging period is called Peak Debt.
It includes:
Existing loan balance
Purchase price (or construction cost)
Buying and selling costs (e.g. stamp duty, legal fees)
Capitalised interest (if applicable)
Less any available savings (own funds)
End Debt
After the existing property is sold, the loan reduces to End Debt:
End Debt = Peak Debt – Net Sale Proceeds
This is the remaining loan balance that the borrower must be able to service long-term.
Repayments During Bridging
During the bridging period (often up to 6 months):
Repayments are usually interest-only
Some lenders allow capitalisation of interest
If interest is capitalised, the Peak Debt increases over time
Important: Lenders assess affordability based on the End Debt, not the Peak Debt.
Lender Requirements
Lender approaches to bridging loans may vary:
Some require two separate applications:
One for Peak Debt (bridging phase)
One for End Debt (residual loan)
Others may handle it under a single structured application
It is best practice to confirm requirements with the lender’s BDM before submitting an application
Setting Up a Bridging Loan in Salestrekker
When configuring a bridging loan in Salestrekker, follow these steps:
1. Add Securities
Include two properties:
Existing property (listed under assets and “To be sold” box shoud be ticked)
New property (to be purchased or built)
2. Configure Security Details
Mark securities as cross-collateralised in the Funding worksheet
Set:
Existing property → Refinance
New property → Purchase or Construction
3. Select Product
Go to Product Search
Set:
Facility Type: Bridging Finance
LVR: Usually 70%–80%
4. Run Search
Click Search to display available bridging loan products
Additional Resources
Within Salestrekker’s Lender Document Library, you can find:
Bridging loan checklists
Bridging calculators
Supporting lender documents
These resources can assist with structuring and submitting applications effectively.
Best Practice
Before submitting a bridging loan:
Confirm structure and policy with the lender
Ensure End Debt is serviceable
Double-check all costs included in Peak Debt