What is bridging loan?
A bridging loan is a short-term home loan (typically 6-12 months) that covers the gap between buying a new property and selling your existing one — interest is capitalised onto the loan rather than paid monthly.
A bridging loan funds the purchase of your next property before your current property has settled. The lender typically advances funds equal to (new property price + outstanding loan on old property), with interest charged on the bridging portion and capitalised onto the loan balance rather than paid monthly.
There are two common structures: 'closed bridging' (existing property already has an unconditional sale contract — short term, 1-6 months, sharper rate) and 'open bridging' (existing property not yet sold — longer term, 6-12 months, higher rate to compensate for sale-risk).
Bridging is expensive: rates run 0.50-1.50% above standard variable, plus application fees of $500-$1,500. The economics work when the alternative (selling first, then renting, then buying) involves moving twice, paying rent in between, and missing the desired property. Plan for the bridging period to be shorter than you expect.
bridging finance · bridging home loan · interim loan
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General information only — not personal financial advice. Verified against https://ratesniffers.com.au/glossary on 2026-06-01.