Bridging Loans Explained: What They Are and When to Use Them
Timing doesn’t always work in your favour when buying and selling property. You might find the perfect next home before your current one sells, or your settlement dates may not line up. That’s where bridging loans come in. In 2025, as housing supply tightens and competition increases, these short-term finance solutions are becoming an essential tool for savvy buyers.
What Is a Bridging Loan?
A bridging loan is a short-term loan designed to ‘bridge the gap’ between the purchase of a new property and the sale of an existing one. It allows you to move forward with buying your new home without having to wait for your old one to sell first.
Typically, you’ll repay the loan once your original home sells, often within six to twelve months. During this time, you may only pay interest on the total loan amount, which can help ease cash flow.
Key Features
- Short-term (usually up to 12 months)
- Can be interest-only during the bridging period
- Based on the total loan amount (existing loan + new purchase)
- Requires a clear exit strategy — usually sale of the current property
When Does It Make Sense to Use One?
- You’ve found your ideal next home but haven’t sold your current property yet
- Your current home is listed but likely to take a few months to sell
- You want to avoid the cost and stress of renting between settlements Bridging loans can offer freedom, but they’re not risk-free. If your home doesn’t sell within the bridging period or sells for less than expected, it could impact your ability to repay the loan.
What to Watch Out For Before jumping into a bridging loan, make sure you:
- Get your property professionally valued
- Work with a broker to understand the repayment scenario if your home sells lower or later than planned
- Factor in the total peak debt (new and existing loan combined)
Some lenders structure bridging loans differently, so having a broker who can compare terms, explain the fine print and negotiate on your behalf is critical. Bridging finance can give you flexibility and peace of mind — but only when it’s structured properly. If you’re navigating a complex buy-sell situation, The Brokerage can help assess whether a bridging loan is right for you and connect you with lenders who’ll support your plan.