Bridging finance can allow a purchase before the existing property sells, but the sale must provide a credible repayment exit. Work backwards from available equity, peak debt, total costs and net sale proceeds. A no-end-debt structure aims to repay the bridge in full from sale, not leave an ongoing loan; the lender must accept that plan.

Calculate equity and peak debt

Start with a realistic sale estimate for the existing property, its mortgage payout and expected selling costs. Then add the new purchase price, transfer costs and any existing debt that must be carried until sale. Peak debt is the highest amount owed while both properties are held, including capitalised interest and fees where applicable. Available equity is not simply the difference between two advertised property values: lender valuations and permitted loan-to-value ratios matter.

A useful worksheet records the existing home’s estimated sale price, current mortgage, agent and conveyancing costs, the new home’s purchase and completion costs, and the bridge balance at each stage. Net sale proceeds are what remains after selling costs and the existing mortgage are paid. Compare those proceeds with the amount required to clear the bridging facility. If they do not cover it, there may be residual debt or a shortfall requiring another acceptable repayment source.

Understand interest and fees

Ask whether interest is paid monthly or capitalised into the loan. Capitalising interest can ease payments during the bridge but increases the balance and reduces remaining equity at sale. Count establishment, valuation, legal, discharge and property-selling costs, plus any extension or default charges. Compare the proposed term with a plausible marketing and settlement period, not just the best-case sale date. Costs and structures vary by lender.

Stress-test the sale exit

Model a lower sale price and a slower sale separately, then combine them. For example, if the property sells later, extra interest may accrue; if it sells for less, net proceeds fall at the same time. Ask what happens if the bridge expires before settlement and whether an extension is possible, on what terms. There is no guaranteed sale timeframe or price. A lender may enforce its security if the debt is not repaid under the facility terms.

Consider alternatives

Depending on your circumstances, selling first and arranging temporary accommodation, negotiating a longer settlement, using a subject-to-sale arrangement if accepted, or delaying the purchase may reduce borrowing risk. A conventional bridging structure with an ongoing loan may be relevant if some debt will remain and servicing is acceptable. Compare each option with independent conveyancing and financial advice before signing contracts.

Frequently asked questions

Can I bridge without an ongoing loan?

Potentially, if credible net sale proceeds can repay the entire facility and the lender accepts the equity, security and exit plan.

Can interest be added to the loan?

Some facilities allow capitalised interest. That increases peak debt and reduces the proceeds left after sale; ask for a written repayment estimate.

What if my home sells below the estimate?

You may have less equity to repay the bridge. Test a conservative price and identify a fallback before committing.

What if the sale is delayed?

Interest and extension costs may continue, and repayment obligations remain. Confirm the facility’s maturity and default provisions in advance.

For broader buying preparation, see the first-home costs and pre-approval guide in Related articles below.

This article contains general information only and does not consider your objectives, financial position or needs. Lending is subject to lender policy, valuation, loan purpose, credit assessment, loan-to-value requirements and approval. Rates, fees and policies may change. Consider obtaining independent legal, tax and financial advice before entering a bridging facility.

Browse more finance guides