Bridging finance: funds now, repaid when the sale or refinance lands

Business is full of gaps between “the money’s coming” and “the money’s here”. A commercial property is on the market but you’ve found the next premises. A business sale settles in eight weeks but the new venture needs funding now. A bank refinance is approved but won’t settle until after your current loan expires. Bridging finance carries you across.

How does bridging finance work?

A lender advances funds secured against property — the one being sold, another you own, or both. The loan runs for a short term, often a few months to about a year. When the exit event happens, the proceeds repay the loan in one go.

Because the exit is the whole point, many bridging loans are structured with capitalised interest: you don’t make regular repayments during the bridge, and the accumulated cost is repaid at the end along with the principal. Others are interest-only with monthly payments. Either way, the principal is repaid from the exit.

What makes a good bridging exit?

Lenders grade exits by certainty:

Exit	Certainty	What helps
Exchanged property sale contract	High	Copy of contract, settlement date
Approved refinance	High	Formal approval letter
Property listed for sale	Medium	Agent’s appraisal, realistic price, saleable property
Business sale under negotiation	Medium–low	Heads of agreement, buyer finance status
“We’ll sell something eventually”	Low	Expect more questions or a no

The more certain the exit, the higher the LVR a lender may allow and the faster it can move. If you have a contract or approval in hand, mention it when you apply — it can take hours off the assessment.

How fast can bridging finance fund?

When the property title is clear and the exit is documented, bridging finance can move as quickly as any property-backed loan: $20k to $250k is possible on the same day, and up to $5m is possible within 24–48 hours on a straightforward deal. The usual timing factors are the valuation, any existing lender’s payout or consent, and having everyone on title available to sign.

Settlements are typically completed electronically under the national framework that ARNECC coordinates, which helps once documents are signed. Our page on settlement and funds release walks through the final hours.

When do businesses use bridging finance?

• Buying before selling — new premises are available now; the old ones will sell in a few months.
• A settlement shortfall — the buyer’s finance or your own is short by a margin, and the date can’t move. See settlement shortfall.
• Refinance timing — your current loan expires before a new lender is ready to settle.
• Development or renovation exits — a completed project needs time to sell.
• Business sale proceeds — funding a new venture before the old one’s sale completes.

What does bridging cost, and what can go wrong?

Bridging is short-term, property-secured finance, so it’s priced above standard mortgages. Look at:

• The total payout at the end, including capitalised interest and fees.
• The term, with a buffer — sales often take longer than agents suggest.
• Extension terms if the exit is late.
• Valuation risk — if the property sells for less than hoped, will the proceeds still clear the loan?

An illustrative example: a Toowoomba agricultural supplier has signed a lease-to-buy on a larger depot and needs a $350,000 deposit in three weeks. Its current depot is listed with a realistic agent appraisal. A nine-month bridging loan secured over the current depot funds the deposit; the old depot sells in month five, and the bridge is repaid with four months of buffer unused.

Bridging finance or a longer loan?

If there’s no clear exit, a bridging loan is the wrong tool — a first mortgage over a longer term is usually more sensible. If the gap is very short and the amount modest, a caveat loan may be simpler. We’ll talk through all three on the call.

How do you size a bridging loan safely?

The amount you can borrow and the amount you should borrow aren’t always the same. A careful way to size a bridge:

1. Start with the expected exit proceeds — the realistic sale price, less selling costs and any existing mortgage that must be repaid from the sale.
2. Allow for a lower price. Test what happens if the property sells for less than hoped. Will the proceeds still clear the bridge?
3. Add the total cost of the bridge over a realistic term, including capitalised interest and fees.
4. Leave a margin. The bridge plus its costs should sit comfortably inside the conservative proceeds, not right at the edge.

This matters because bridging loans with capitalised interest grow over time. A loan that fits neatly at month three may be tight at month nine if the sale drags on. Lenders run similar numbers, but it’s your equity on the line, so run them yourself too.

If the arithmetic only works with a best-case sale price and a quick sale, consider borrowing less, adding another property as security, or choosing a different structure. A specialist can model a couple of scenarios with you on the first call.

Bridge the gap without missing the date

If you know the money is coming and you need it sooner, bridging finance is built for exactly that. Asking costs you nothing and doesn’t involve a credit check, one team works on your file rather than sending it out to many lenders, and a real person plans the timeline with you. Please share the exit details accurately — the contract, the approval, the listing — so we can match you with the right bridge first time. Start your application.