What is a bridging loan in Australia?

A bridging loan is a short-term loan used to cover the funding gap between buying a new property and selling an existing one.

How quickly can bridging loans be approved?

Bridging loans can often be approved within a few days, depending on the transaction complexity, lender requirements and availability of supporting information.

What is the maximum LVR for a bridging loan?

Maximum LVR varies by lender and scenario, but many bridging loans are structured up to 65–75% LVR. Higher LVRs may be available depending on the risk profile.

Do bridging loans require income verification?

Not always. Some bridging lenders focus on the security property and exit strategy, although income and serviceability requirements depend on the loan purpose, lender and applicable lending laws.

What is the difference between bridging loans and equity release?

A bridging loan generally funds a specific short-term transaction, while equity release involves accessing available capital from a property the borrower already owns.

Can investors use bridging loans?

Yes. Bridging loans are commonly used by property investors and developers for short-term funding, acquisitions, refinancing and development-related transactions.

Types of Bridging Loans in Australia: Which One Do You Need?

Bridging finance is not a single product. The structure that suits a homeowner moving between houses is not the one that suits a developer holding a site, and neither is the one that suits a business owner who needs to keep an existing mortgage in place.

There are three main structures we arrange. This page explains what separates them and which is likely to fit your situation.

If you are moving house and the loan is for personal purposes, you want a residential bridging loan. If the purpose is business, investment or development, you want a commercial bridging loan. If you need to borrow against a property without disturbing the mortgage already on it, you want a second mortgage.

Which type of bridging loan do you need?

Work through these in order. The first one that matches is usually your answer.

Buying a home before selling your existing one, for yourself to live in. Residential bridging loan. Regulated consumer credit, assessed with responsible lending obligations. See residential bridging.
Buying, holding or refinancing property for business, investment or development. Commercial bridging loan. Usually faster and more flexible, assessed on the asset and the exit. See commercial bridging loans.
You need funds but want to keep your existing first mortgage untouched. Second mortgage. The new lender registers behind your current one. See second mortgage loans.
Not sure, or the purpose is mixed. That is common and it matters, because the classification changes your documentation, your timeline and your legal protections. Talk it through with us before you apply.

Residential bridging loans

Short-term finance secured against residential property, used predominantly for personal, domestic or household purposes. The classic case is buying your next home before the current one sells.

Typically used for: buying before selling, upgrading, downsizing, auction purchases, or avoiding temporary accommodation between settlements.

What is different about it: where credit is predominantly for personal purposes, consumer credit laws and responsible lending obligations apply. That means the lender and broker must assess your requirements, objectives and financial situation, and consider whether the credit would be unsuitable, even where the exit is a property sale. It adds process, and it exists to protect you. Full detail on residential bridging loans.

Commercial bridging loans

Short-term property-secured finance for business, investment or development purposes. Security can be residential, commercial, industrial, land or a development site.

Typically used for: acquiring an investment property, refinancing business debt, holding a development site, bridging into construction finance, completing a project before a take-out refinance, or covering a short-term business funding need against property.

What is different about it: facilities structured for genuine business or investment purposes may sit outside the consumer credit framework, which generally means less prescriptive documentation and a faster path to settlement. That flexibility is real, but so is the reduced consumer protection, and lenders still assess the security, the purpose and the exit carefully. Commonly arranged for property investors, developers and business owners. Full detail on commercial bridging loans.

Second mortgage loans

A second mortgage sits behind an existing first mortgage on the same property. Your current loan stays exactly where it is, and the new lender registers a second-ranking security.

Typically used when: your existing loan is on terms you do not want to lose, breaking or refinancing it would trigger costs, the first lender will not increase the facility, or you need funds faster than a full refinance allows.

What is different about it: because the second mortgagee ranks behind the first if anything goes wrong, pricing is higher and the total debt across both loans is assessed against the property value. The first mortgagee's consent or a priority arrangement is often required. Through our panel, second mortgages are generally available for eligible business or investment purposes rather than personal consumer purposes. Full detail on second mortgage loans.

Not sure which structure fits? Tell us the property, the amount you need, what the funds are for and when you need them. We will tell you which type applies, what it is likely to cost, and whether it is the right tool at all. Talk to our team.

Consumer or commercial: why the classification matters

This is the most consequential distinction on the page, and the one borrowers most often get wrong. Classification is determined by the predominant purpose of the funds, not by the type of property securing the loan or by who you are.

You can borrow against your own home for a business purpose and have it treated as commercial. You can borrow against an investment property for a personal purpose and have it treated as consumer. What changes with the classification:

Assessment. Consumer-purpose credit requires reasonable inquiries into your requirements, objectives and financial situation, verification, and an assessment of whether the credit would be unsuitable. Commercial does not carry the same obligations.
Documentation and speed. Consumer applications generally require more, which takes longer. Commercial facilities can move faster.
Protections. Consumer credit carries statutory protections and access to external dispute resolution that commercial lending does not.
Available lenders. Some lenders write only one or the other, so the classification changes which options exist for you.

Declaring a business purpose to obtain faster or less regulated finance when the real purpose is personal is a serious matter, and lenders take declarations seriously. If your purpose is genuinely mixed, say so and let it be assessed properly.

First mortgage or second mortgage?

This is a separate question from consumer versus commercial, and it is about where the new lender ranks on the title.

A first mortgage means the bridging lender holds first-ranking security. Often this involves refinancing your existing lender and advancing the extra funds in one facility. Lower enforcement risk for the lender, so generally better pricing.
A second mortgage leaves your existing loan in place and adds a second-ranking security behind it. Faster and less disruptive where your first loan is worth keeping, but priced higher and usually requiring the first mortgagee's consent.

The deciding factors are usually whether your existing loan is worth preserving, what it costs to break or discharge it, and whether the combined debt across both loans sits at an acceptable loan-to-value ratio. If you are weighing a second mortgage against other short-term options, see bridging loans versus second mortgages and bridging loans versus caveat loans.

How the three types compare

Purpose. Residential is personal and domestic. Commercial is business, investment or development. A second mortgage is defined by its position on title rather than its purpose, and through our panel is generally available for business or investment purposes.
Regulation. Residential consumer credit is regulated with responsible lending obligations. Commercial facilities for genuine business purposes may be exempt. Second mortgages follow the purpose of the funds.
Speed. Commercial and second mortgage facilities generally move faster than consumer applications, because the assessment requirements differ.
Pricing. Residential first mortgage is usually the sharpest. Commercial sits above it. Second mortgages price highest, reflecting the ranking risk.
Security. Residential is limited to residential property. Commercial can take residential, commercial, industrial or land. A second mortgage requires enough equity above the existing first mortgage.
Exit. All three are structured around a defined exit: a sale, a refinance, or a project completion.

The mechanics common to all three, including peak debt, end debt and how interest is charged, are covered in how bridging loans work. Pricing for each is on the interest rates page, and total cost on costs and fees.

Who lends on each type

Bridging finance in Australia comes from three broad sources, and the type you need narrows which are available.

Banks offer bridging and relocation products, mostly for straightforward residential scenarios. Cheapest where you fit, slowest to assess, narrowest criteria.

Non-bank lenders sit in the middle. Wider appetite than a bank, faster, priced above bank products but below private funding. They cover much of the commercial and complex residential space.

Private and specialist lenders price highest and move fastest, and will consider security, structures and timelines the other two will not. This is where most second mortgage and urgent settlement funding comes from.

We compare across all three. If a bank product suits you, we will say so, because there is no point paying specialist pricing for a scenario a bank would happily write.

Frequently asked questions

What are the main types of bridging loans in Australia?

Residential bridging loans for personal purposes, commercial bridging loans for business, investment or development purposes, and second mortgages where an existing first mortgage stays in place. Facilities are also described as open or closed depending on whether the exit is already contracted.

What is the difference between a residential and a commercial bridging loan?

The predominant purpose of the funds. Residential consumer-purpose credit is regulated and carries responsible lending obligations. Commercial facilities for genuine business or investment purposes may sit outside that framework, which usually means less documentation and a faster path to settlement, with correspondingly fewer consumer protections.

Is a bridging loan a first or second mortgage?

It can be either. A first-mortgage facility often refinances your existing loan and advances the additional funds together. A second mortgage leaves the existing loan in place and registers behind it, which is faster and less disruptive but priced higher.

What is a second mortgage?

A loan secured against a property that already has a mortgage on it, where the new lender ranks second on title. It lets you keep your existing loan untouched, and the combined debt across both loans is assessed against the property value.

Does the type of property determine the type of loan?

No. The purpose of the funds determines the classification. You can borrow against your own home for a business purpose and have it assessed as commercial, or against an investment property for a personal purpose and have it assessed as consumer.

Which type is cheapest?

Generally a residential first mortgage, then commercial, with second mortgages priced highest because of the ranking risk. But the LVR, the security and the strength of your exit move pricing more than the category does.

Can I get a second mortgage for personal purposes?

Through our current panel, second mortgages are generally available for eligible business or investment purposes rather than personal consumer purposes.

What if my purpose is mixed?

Say so. The classification follows the predominant purpose, and getting it wrong affects your documentation, your protections and which lenders can help. It is better assessed properly at the outset than corrected later.

Talk to a bridging specialist

Getting the type right at the start saves time, cost and a declined application. We assess which structure fits your scenario and compare options across Australia from a panel of bank, non-bank and specialist lenders. Contact our team to discuss your transaction, see the full range of bridging loan use cases, or read more about our brokerage.