How to buy before you sell without the wait

Bridging finance covers the gap when you need to buy before your current property sells.

It works by using the equity in your existing home as security for a short term loan, which covers the deposit and settlement on the new property. Once your original home sells, the proceeds repay the bridging loan amount and you refinance the remaining debt into a standard home loan. The bridging period typically runs between six and twelve months, though some lenders will extend this if your property is under contract or actively marketed.

When bridging finance makes sense for shift workers

Bridging finance suits buyers who've found the right property but can't align the sale and purchase settlements. You avoid making your offer subject to sale, which strengthens your position in negotiations and speeds up the process. For officers working rotating rosters, this removes the pressure of coordinating inspections, auctions, and settlement dates around unpredictable shifts.

Consider a detective who finds a property that fits the school zone and commute but whose current home won't settle for another four months. A bridging loan lets them secure the new place immediately, move the family during school holidays, and list the old property without the stress of a contingent contract falling through. The alternative is either losing the property to another buyer or selling first and renting temporarily, which doubles the disruption.

How lenders calculate what you can borrow

Lenders assess bridging finance based on the combined loan to value ratio across both properties. They'll lend against the equity in your current home plus the new purchase price, with most capping the total LVR between 80% and 90%. If the combined borrowing pushes you above 80%, you'll usually pay lenders mortgage insurance on the portion that exceeds that threshold.

Your income still needs to service both loans during the bridging period, though most lenders will capitalise the interest on the bridging component so you're not making repayments out of pocket. That capitalised interest gets added to the loan balance and repaid when your original property sells. Because of the dual loan servicing requirement, borrowing capacity calculations become more important than usual, particularly if you're carrying other debts or have variable income from overtime or allowances.

What bridging finance actually costs

Bridging loan interest rates sit higher than standard variable rates, typically between 1% and 2% above the lender's usual home loan rate. You'll also pay application fees, valuation fees on both properties, and sometimes a line fee or facility fee for the bridging loan itself. Legal and settlement costs apply to both the purchase and the eventual sale, so budget for solicitor fees, title searches, and transfer duties.

Interest capitalisation means you won't make monthly repayments during the bridging period, but the interest still accrues daily and compounds. On a bridging loan amount of $150,000 over six months, you might accumulate $5,000 to $6,000 in capitalised interest depending on the rate. That amount gets rolled into the total debt and repaid once your original home sells. Some lenders charge break costs if you repay the bridging loan early, though this is less common on short term facilities than on fixed rate home loans.

The approval process and what lenders want to see

Bridging loan approval depends on your ability to service both loans and the lender's confidence that your existing property will sell within the bridging period. They'll want a recent valuation, an appraisal from a local agent, or evidence that comparable properties in your area are selling within reasonable timeframes. If your property is already under contract, approval is usually straightforward. If it's not yet listed, expect the lender to apply a discounted valuation or require a shorter bridging loan term.

Your employment status matters more than usual because lenders are taking on additional risk by holding security over two properties. Permanent law enforcement roles with predictable base income generally meet the servicing requirements, but if you're relying heavily on shift penalties or overtime to cover the repayments, some lenders will discount that income or exclude it entirely. If you've recently refinanced or taken out other credit, that can also tighten your borrowing capacity and limit how much bridging finance you can access.

Alternatives if bridging finance doesn't fit

If the numbers don't work or the lender won't approve the dual loan structure, selling first is the most common fallback. You can request a longer settlement period on your sale to give yourself time to find and settle on the new property, though that depends on the buyer's flexibility. Some officers arrange short term rentals or move in with family between settlements to avoid the timing clash altogether.

Another option is a deposit bond, which acts as a guarantee to the vendor that you'll pay the deposit at settlement rather than upfront. This can work if you're confident your existing property will sell quickly and you just need a few extra weeks. Deposit bonds cost less than bridging finance but aren't accepted by all vendors, particularly in competitive markets where sellers want certainty. For officers with access to equity but no immediate need to sell, refinancing your current home loan to release funds for the new deposit might be more cost-effective than a bridging loan, though it extends your debt rather than clearing it once the sale completes.

What happens if your property doesn't sell in time

If your original home hasn't sold by the end of the bridging loan term, most lenders will extend the facility for another few months, though they'll usually charge an extension fee and may increase the interest rate. If the property still hasn't sold after the extension, the lender can require you to refinance both properties into a standard home loan structure, which means you'll need to service both mortgages from your income without capitalising the interest.

In worst-case scenarios where the property isn't selling and you can't service both loans, the lender may push for a forced sale or require you to sell the new property instead. This is rare but not unheard of, particularly if the market has softened or the property was overvalued at the start of the bridging period. Choosing a realistic sale price and listing early reduces this risk significantly, as does working with an agent who understands your timeline and the need for a definite outcome within the bridging period.

Call one of our team or book an appointment at a time that works for you. We'll review your equity position, compare bridging finance costs against your other options, and line up a lender who'll work with your roster and settlement dates.

Frequently Asked Questions