How fast can bridging loans settle?

Residential bridging loans can settle in as little as 3 to 7 days, while commercial bridging loans typically settle within 5 to 14 days depending on valuation, documentation and legal requirements.

What is the maximum LVR for bridging loans?

Most bridging loans are structured up to 65 to 75 percent of the combined property value, depending on the strength of the exit strategy, security and location.

Can I get a bridging loan without selling my property first?

Yes, this is known as an open bridging loan where the existing property is listed for sale but not yet sold.

Can interest be capitalised on a bridging loan?

Yes, many bridging loans allow interest to be capitalised, meaning repayments are deferred and added to the loan balance during the term.

What is an exit strategy in a bridging loan?

An exit strategy is the defined method of repaying the loan, typically through the sale of a property or refinancing into a longer-term loan.

What is the difference between open and closed bridging loans?

A closed bridging loan has a confirmed sale date for the existing property, while an open bridging loan does not and therefore carries higher risk and flexibility.

Can bridging loans be used for investment properties?

Yes, bridging loans are commonly used by property investors to purchase, renovate or reposition assets before refinancing or selling.

What costs are involved in a bridging loan?

Typical costs include establishment fees, legal fees, valuation costs, interest charges, risk margins and potential extension or default fees.

Can I repay a bridging loan early?

Yes, most bridging loans can be repaid early. Consumer loans typically do not have early repayment penalties, while some business-purpose loans may include break costs.

Frequently Asked Questions – Bridging Loans Australia

Q: Are bridging loans regulated in Australia?

Consumer bridging loans are regulated under NCCP, while business-purpose bridging loans are generally exempt from these regulations.

What is a bridging loan?

A bridging loan is a short-term property loan designed to “bridge” the gap between buying a property and selling another asset or refinancing existing debt. These loans are commonly used when borrowers need access to funds quickly before long-term finance is arranged or before a property sale settles.

How do bridging loans work?

Bridging loans provide temporary funding secured against property. The loan is typically repaid once the borrower sells an existing property, refinances the loan with another lender, or completes a property transaction such as a development or settlement. Loan terms are usually 3 to 12 months depending on the structure and exit strategy. Learn more about how bridging loans work.

What can bridging loans be used for?

Bridging loans are commonly used for:

Buying a new property before selling an existing one
Property settlements with tight deadlines
Auction purchases
Short-term development funding
Refinancing existing debt
Releasing equity from property

How quickly can a bridging loan settle?

Bridging loans are designed for speed. In many cases, loans can settle within 3 to 7 business days once valuation and documentation requirements are completed.

What interest rates do bridging loans charge?

Interest rates depend on the borrower profile, loan structure and security.

Typical starting rates include:

Consumer bridging loans: from approximately 7.49% p.a.
Commercial or business-purpose bridging loans: from approximately 8.5% p.a.

Rates vary depending on loan-to-value ratio, property type and exit strategy.

What is the maximum LVR for a bridging loan?

Most bridging loans are structured up to 65% to 75% loan-to-value ratio (LVR) depending on the asset, location and exit strategy.

Do bridging loans require income verification?

Not always. Many bridging loans are asset-based, meaning approval focuses primarily on the value of the property, the loan-to-value ratio and the exit strategy rather than long-term income servicing.

Can interest be capitalised?

Yes. Many bridging loans allow capitalised interest, meaning interest is added to the loan balance rather than being paid monthly. This can help borrowers preserve cash flow during the loan term.

What fees are associated with bridging loans?

Bridging loans may include several fees depending on the lender and loan structure, including:

Establishment fees
Origination fees
Valuation costs
Legal and settlement fees
Discharge fees

All costs should be clearly outlined before proceeding.

Are bridging loans regulated in Australia?

Regulation depends on the purpose of the loan.

Consumer bridging loans may fall under the National Consumer Credit Protection Act (NCCP).
Business-purpose bridging loans are generally NCCP-exempt.

What property types can be used as security?

Bridging loans can be secured against various property types including:

Each scenario is assessed individually.

Can bridging loans be secured against multiple properties?

Yes, here is how it works. In some cases, lenders may allow multiple properties to be used as security to strengthen the loan structure or increase the available borrowing amount.

What information is required to apply for a bridging loan?

Typical information required includes:

Property address and estimated value
Existing loan balances
Loan amount required
Settlement timeframe
Exit strategy

Providing accurate information helps lenders assess the scenario more quickly.

Do I need a valuation for a bridging loan?

Yes. Most bridging loans require a valuation or property assessment to confirm the asset value and determine the maximum loan-to-value ratio.

What is an exit strategy?

An exit strategy explains how the loan will be repaid. Common exit strategies include:

Sale of property
Refinance into long-term finance
Completion of a development project
Asset sale or liquidity event

A clear exit strategy is essential for bridging loan approval.

What happens if my property does not sell?

If the property does not sell within the expected timeframe, options may include:

Extending the loan term
Refinancing the loan
Adjusting the exit strategy

Each situation is assessed individually depending on the equity position and borrower profile.

Can bridging loans be extended?

In some cases, lenders may consider extending the loan term if additional time is required and the borrower has a viable exit strategy.

How are bridging loans repaid?

Bridging loans are usually repaid through the sale of property or refinance into a long-term loan. The loan balance, including capitalised interest if applicable, is repaid at settlement.

Can I buy a property before selling my existing one?

Yes. This is one of the most common uses of bridging finance. Borrowers can purchase a new property first and repay the loan once their existing property is sold.

Are bridging loans suitable for downsizers?

Yes. Many downsizers use bridging loans to purchase their next home before their existing property settles, allowing them to transition more smoothly between properties.

Can bridging loans be used for property development?

Yes. Bridging loans are sometimes used to complete projects, refinance existing development debt or fund short-term development scenarios prior to long-term refinancing.

Are bridging loans suitable for investors?

Yes. Property investors commonly use bridging loans for auction purchases, short settlement periods or short-term opportunities that require fast access to capital.

Are there penalties for early repayment of a bridging loan?

Early repayment conditions depend on the loan structure.

For consumer bridging loans, interest is typically calculated daily, meaning borrowers generally only pay interest for the time the loan is outstanding and there is usually no penalty for early repayment.
For non-consumer (business-purpose) loans, lenders may apply minimum interest periods or early settlement conditions.

Are there break costs associated with bridging loans?

In both consumer and non-consumer bridging loans, there may be break costs, discharge fees or administrative costs associated with finalising the loan early. These costs vary depending on the lender and loan structure.

How quickly can I find out if my bridging loan scenario is viable?

Many bridging loan scenarios can be initially assessed within the same business day once key information such as the property value, existing debt and required loan amount are provided.