Bridging Loan Australia: Buy Before Selling Case Study ($13M to $7.2M)
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Scenario: Downsizing with a Settlement Timing Gap
In high-value property markets such as Sydney’s Eastern Suburbs, timing mismatches between transactions are common particularly when downsizing.
In this scenario, a client had secured the sale of their Bellevue Hill property for $13,000,000, with a long settlement period to allow time to find their next home. However, an opportunity arose sooner than expected. The client identified a suitable downsizing property in Dover Heights for $7,200,000, but the vendor required a significantly shorter settlement timeframe. This created a clear funding gap. This bridging loan Australia buy before selling case study demonstrates how property timing gaps can be structured using short-term funding.
The Problem: Misaligned Settlements and Liquidity Constraints
The client’s position involved:
A $13M contracted sale with delayed settlement
A $7.2M purchase requiring prompt completion
Insufficient liquid funds to complete the purchase
A risk of losing the new property due to timing constraints
Traditional lenders were not suitable due to:
Approval timeframes
Inflexible structuring
Inability to accommodate short-term bridging requirements
Without fast access to capital, the client would not have been able to proceed.
The Solution: Bridging Loan Structured at 70% LVR
A bridging loan was structured to allow the client to:
Proceed with the Dover Heights purchase
Retain ownership of the Bellevue Hill property until settlement
Avoid forced sale or missed opportunity
The facility was assessed conservatively at 70% Loan-to-Value Ratio (LVR) against the existing property, ensuring a strong equity buffer throughout the loan term.
Funding Snapshot (Indicative Example)
Property Position
Existing Property (Bellevue Hill): Sold for $13,000,000
Settlement Period: ~6 months
New Purchase (Dover Heights): $7,200,000
Required Settlement: ~30 days
Bridging Loan Structure
Loan Type: First mortgage bridging loan
Security: Existing property
LVR: ~70%
Peak Debt Exposure: ~$7,300,000
Loan Term: 6 months
Interest Rate: ~7.75% p.a. (capitalised)
Repayments: Nil during term (interest capitalised)
Cash Flow & Exit
Funding Gap Covered: Full purchase requirement
Equity Position: Strong (supported by $13M sale)
Exit Strategy: Settlement of Bellevue Hill property
How the Bridging Loan Was Assessed
The loan was structured based on:
The confirmed $13M sale contract
The timing mismatch between settlements
The client’s equity position at ~70% LVR
A clearly defined exit strategy via settlement proceeds
At peak exposure, the lender assessed total debt across the bridging period, ensuring it remained within acceptable LVR thresholds.
This conservative approach allowed for:
Competitive pricing
Reduced risk profile
Faster approval and execution
This bridging loan Australia buy before selling highlights how funding gaps can be structured between property settlements.
Bridging Loan Australia Buy Before Selling: How It Works
This bridging loan Australia buy before selling structure is commonly used when settlement dates do not align between properties.
The client exchanged contracts on the Dover Heights property
The confirmed sale of the Bellevue Hill property was reviewed
A bridging loan facility was structured at ~70% LVR
Approval and funding were arranged within a short timeframe
The Dover Heights purchase settled within the required period
The Bellevue Hill property settled as scheduled
The bridging loan was repaid in full upon settlement
Understanding Peak Debt in This Scenario
During the bridging period, the lender assessed the maximum exposure (peak debt) — being the highest level of debt held at any one time.
In this case:
Peak exposure remained within ~70% LVR
Interest was capitalised across the term
No monthly repayments were required
This structure is typical for first mortgage bridging facilities with a defined exit.
The Outcome
The client was able to:
Secure a premium downsizing property
Avoid losing the opportunity due to timing
Maintain control over the sale process
Transition between properties without financial pressure
Why Bridging Loans Are Used in Buy-Before-Sell Scenarios
Bridging loans are commonly used when:
A new property is secured before an existing one settles
Settlement timeframes do not align
There is a temporary liquidity gap
Speed and flexibility are required
They provide a short-term, asset-backed funding solution designed specifically for transitional property scenarios. Situations like this are a classic example of a bridging loan Australia buy before selling scenario, where timing creates a temporary funding gap.
Key Takeaways
Bridging loans allow you to buy before selling
Strong equity positions (lower LVR) improve outcomes
Peak debt and exit strategy are critical
Timing flexibility can unlock premium property opportunities
Frequently Asked Questions
Can I buy a property before selling my existing one?
Yes, this is commonly achieved using a bridging loan where funding is secured against your existing property.
What is peak debt in a bridging loan?
Peak debt refers to the maximum total debt held during the bridging period, before the existing property is sold.
Do I need to make repayments during a bridging loan?
In many bridging scenarios, interest is capitalised, meaning no monthly repayments are required.
How is the loan repaid?
Typically, the bridging loan is repaid from the sale of the existing property.
Can bridging loans be arranged quickly?
Yes, subject to the scenario, approvals and settlements can often be completed within short timeframes.
Final Thoughts
In premium markets like Bellevue Hill and Dover Heights, opportunities can arise quickly and settlement timing rarely aligns perfectly. A well-structured bridging loan, particularly at a conservative LVR with a defined exit, can provide the flexibility required to secure the right property without compromise.
