COVER THE GAP

Bridging Finance

Bridging finance covers the distance between two certain events, when one of them happens before the other. It works when both events are real and dated. It fails when one of them is a hope.

Model the bridge 1300 015 267

Lender panel
40+
Structure
Interest only, often capitalised
Term
Short, tied to the exit
Sources
Bank, non-bank, private

Is this you?

If any of these are true, we can help.

Talk it through

A business buying new premises before the existing site sells
An investor settling on a commercial purchase ahead of a scheduled sale
A developer holding completed stock while sales settle
A company waiting on a refinance that will not settle by the due date
An owner whose incoming funds are certain but late
A borrower who needs breathing room and can prove where the money comes from

How it works

Three moves, in plain words.

Evidence of the exit
A contract of sale, a formal approval from an incoming lender, a registration timetable, or a signed agreement for the receivable. The stronger the evidence, the cheaper the bridge.
Valuations of both assets
Incoming and outgoing. On the outgoing asset, lenders often work from a figure reflecting a limited marketing period rather than an unhurried sale.
A realistic term with a buffer
Add time. Sales fall over, settlements extend, titles register late. A term that is two months longer than needed costs far less than a default or an extension.

Tell us what is happening and when.

Send us the numbers 1300 015 267

Closed and open bridges

Lenders divide bridging into two categories, and the difference decides both the price and whether the loan is available at all.

	Closed bridge	Open bridge
The exit	Contracted and dated	Expected but not contracted
Example	A property that has exchanged and settles on a known date	A property being marketed but not yet sold
Lender comfort	High	Lower, priced accordingly
Typical term	Matched to the settlement date	Longer, with a buffer
Availability	Broad	Narrower, mostly non-bank and private

A closed bridge is close to an administrative exercise: money moves early against a certainty. An open bridge is a genuine credit decision, because the lender is taking a view on whether the asset will sell and at what price. If you can turn an open bridge into a closed one by waiting for an exchange, that is often worth several weeks of patience.

The detail

Peak debt is the number that matters

During a bridge you owe on both assets at once. That combined figure is peak debt, and it is what the lender assesses, not the balance you expect to be left with afterwards.

01Start with the balance on the existing loan.
02Add the purchase price of the new asset, less any cash deposit you are contributing.
03Add duty, legal costs, valuation, establishment fees and the interest expected to accrue during the bridge.
04That total is peak debt, and it is tested against the combined value of both properties.
05Then subtract the expected net sale proceeds of the outgoing asset, after agent commission, legals and any GST, to reach the end debt.
06The end debt has to be serviceable on ordinary terms, because that is the loan you are left holding.

Peak debt and end debt are two different tests

The first number decides whether the bridge is available. The second decides whether it was a good idea. Only one of them is still there in a year, and it is the one that has to service on normal terms.

Illustrative projection only. Not a quote and not an offer of credit.

View as a table

	Amount
Peak debt, while both properties are held	$2,760,000
End debt, once the sale settles	$1,120,000

Worked example · illustrative

Peak debt on a move between premises

The situation: A business owes about $800,000 on its existing site and is buying a new one at about $2 million. It has around $200,000 in cash to contribute. The old site is on the market and has not exchanged.
The move: Peak debt is built from the bottom up: the existing balance, plus the purchase less the cash contribution, plus duty, legals, valuations, fees and the interest expected to accrue while both properties are held. The outgoing site is modelled at a price the owners would accept in a slow market rather than the one they hope for.
Where it lands: The lender tests that peak figure against the combined value of both properties, then tests the end debt — what remains after the sale settles — as an ordinary serviceable loan. If the end debt does not service on normal terms, the bridge should not be written, whatever the peak numbers look like.

A composite example, not a specific client. Any figures are indicative and outcomes depend entirely on individual circumstances and lender assessment.

How interest is handled

Bridging facilities are almost always interest only, because there is no sense amortising a loan that will be repaid in months. What differs is whether the interest is paid or added.

Capitalised interest is added to the balance each month, so nothing leaves your bank account during the bridge. It preserves cash flow and grows the payout figure.
Prepaid interest is deducted from the advance at settlement for the whole term. You receive less than the face amount, and the cost is known up front.
Serviced interest is paid monthly from your own cash flow, which suits businesses with income and keeps the balance flat.
Whichever applies, the amount has to be inside the lending limit. A facility with capitalised interest must have room for that interest, or you will hit the limit before the exit.

Interest capitalised

Added to the balance each month, so nothing leaves your account during the bridge.
Preserves cash flow at precisely the moment you are carrying two assets.
The payout figure grows every month the facility runs.
The limit has to have room for it, or you reach the ceiling before the exit arrives.

Interest serviced monthly

Paid from your own cash flow, so the balance stays flat through the term.
Suits a business with income running through the bridge period.
The cost is visible every month rather than discovered at payout.
Prepaid interest is the third option: deducted at settlement, so you receive less than the face amount and the total is fixed.

The comparison tool on this page is indicative only. It is not an offer of credit, not a quote and not a guarantee of approval, but it does show plainly how differently an interest-only period behaves from an amortising loan.

What lenders want to see

01
Evidence of the exit
A contract of sale, a formal approval from an incoming lender, a registration timetable, or a signed agreement for the receivable. The stronger the evidence, the cheaper the bridge.
02
Valuations of both assets
Incoming and outgoing. On the outgoing asset, lenders often work from a figure reflecting a limited marketing period rather than an unhurried sale.
03
A realistic term with a buffer
Add time. Sales fall over, settlements extend, titles register late. A term that is two months longer than needed costs far less than a default or an extension.
04
The end debt tested properly
The lender assesses whether you can service what is left after the sale, on normal terms. If the end debt does not service, the bridge should not be written.
05
A plan B
If the sale does not happen, what then. A lower reserve price, a longer facility, a refinance. Lenders ask, and so do we.

The gap between leaving one commitment and taking up the next — Bridges rarely fail on the bridge. They fail on an outgoing asset selling slower or cheaper than the model assumed, which is why the term should carry a buffer on the day it is written.

Where bridging shows up in business

Situation	What the bridge does	The exit
Buying new premises before selling the old site	Funds the purchase now	Sale of the existing property
Completed development with stock unsold	Repays the construction facility	Settlements of remaining stock, or a residual stock loan
A refinance running past a due date	Covers the payout of the outgoing lender	The incoming facility settling
Purchasing a business with a delayed capital event	Funds completion	The dated receipt of funds
Cost overrun near practical completion	Finishes the job	Sales or the end facility
Tax liability due before a scheduled settlement	Pays the liability now	The settlement proceeds

The last row is worth pausing on. Where a deadline sits weeks before a certain receipt of funds, a bridge is often much cheaper than the consequences of missing the deadline. Where there is no certain receipt of funds, it is not a bridge at all, and it should be treated as ordinary borrowing and assessed as such.

Getting out cleanly

Diarise the expiry the day you settle, and set a review point at the halfway mark.
If the sale is slow, act at the halfway mark rather than in the final fortnight. Options exist earlier and disappear later.
Start the refinance application well before expiry, because a bank process takes weeks and needs current documents.
Keep the lender informed. A lender told about a delay in advance is a different lender to one told after the expiry date.
Do not extend repeatedly. Two extensions on a bridge usually means the exit assumption was wrong and the position needs restructuring instead.

We stay long after the paperwork is signed. On a bridge, that is the whole job.
WeL’nd

Run the numbers

See it with your own figures.

Indicative only. Change anything — the defaults are starting points, not quotes.

Repayment step-up · indicative$878$4,025 a month becomes $4,903

The loan

Loan amount

The amount you are borrowing, or the balance you are refinancing. The slider covers the common range — type a larger figure straight into the box.

Total loan term

The full life of the loan, including the interest-only period.

Interest-only period

How long you pay interest only before principal and interest starts.

The rates you have been quoted

Rate during the interest-only period

Assumption only. Replace it with the rate your lender has actually quoted. Interest-only is often priced above principal and interest, so set the two fields separately.

Rate after the interest-only period

Assumption only, and the same rate is used for the straight principal and interest comparison so the two structures are judged on equal terms.

Other debts to roll in

Fold other balances in and both columns are worked out on the combined loan.

Add a debt

Pick the closest type. It only sets the name — you fill in the numbers.

Repayment step-up

$878

Your repayment climbs from $4,025 to $4,903 a month the day the interest-only period ends, 5 years from settlement.

That is a rise of 22% in one month.

Monthly repayment, side by side

Interest-only$4,025

After the interest-only period$4,903

Principal and interest throughout$4,610

The honest version

Interest-only lowers what you pay now. It does not lower what the loan costs. It keeps $585 a month in your hands while it runs, and the balance sits exactly where it started. When the period ends, the same debt has to be repaid over 25 years instead of the full term. That is the step-up, and it is the part worth planning for.

Plan for the step-up, not around it

Send us the loan, the term and the interest-only period you have been offered. We will show you what the repayment looks like the month it lands, and whether the structure still earns its place in your plan.

Talk it through with a broker

The detail behind that number

Interest-only repayment: $4,025 / month
Repayment once interest-only ends: $4,903 / month
Principal and interest from day one: $4,610 / month
Balance still owing when interest-only ends: $700,000
Total interest, interest-only structure: $1,012,367
Total interest, principal and interest: $959,672
Extra interest over the life of the loan: + $52,694

Total interest over the term

Interest-only structure$1,012,367

Principal and interest throughout$959,672

What this calculator assumes

The interest-only period is genuine interest-only. Only interest is paid and the balance does not move.
When the interest-only period ends, the full balance is amortised over the remaining term at the rate you entered in the second rate field.
The straight principal and interest comparison uses that same second rate, so the two structures are compared on the rate rather than on the structure plus a rate gap.
Repayments are monthly, in arrears, and the rate holds steady for the whole term. Real rates move, and a variable loan will not behave this smoothly.
No application fees, ongoing fees, discharge fees, offset balances, redraw or extra repayments are included.
The interest-only period is capped at twelve months short of the total term so there is always time left to repay the principal.
Other debts you add are rolled into the loan, and both the interest-only and the principal and interest columns are worked out on the combined balance at the rates you entered over the same term. Payout figures, exit fees and what you pay on those debts today are not modelled.
Both rate fields are placeholders for you to overwrite. They are not rates WeL’nd is offering and they are not a quote from any lender.

Open the full calculator

FAQ

Questions people actually ask

If yours is not here, ask it. We would rather answer the awkward one early than have you find out later.

1300 015 267

What is peak debt?

Peak debt is the total you owe at the point where you hold both assets, including the existing loan, the new purchase, all costs and any interest that will accrue during the bridge. Lenders assess that figure against the combined value of both properties, so it matters more than the balance you expect to be left with.

Do I make repayments during a bridging loan?

Often not. Many bridging facilities capitalise the interest, adding it to the balance so nothing leaves your account during the term. Others require interest prepaid at settlement or serviced monthly. Which applies affects your cash flow and the final payout figure, so confirm it before you commit.

What if my property does not sell in time?

This is the central risk. Options include extending at a cost, adjusting the price, or refinancing into a longer facility, and all of them are easier to arrange early. Speak to the lender at the halfway point rather than in the last fortnight, because choices narrow as the expiry approaches.

Is a bridge cheaper than a caveat loan?

Generally yes, particularly a closed bridge with a contracted exit, because the lender takes a registered first mortgage and knows the repayment date. A caveat facility is faster and weaker in security terms, and it is priced accordingly. Where there is time for a bridge, a bridge is usually the better instrument.

How long can a bridging facility run?

Terms are short and set against the exit event, commonly a handful of months. Build in a buffer, because settlements extend and sales take longer than expected. Paying for an extra month or two at the outset almost always costs less than negotiating an extension under pressure.

Can I bridge between two commercial properties?

Yes. Commercial bridging is common when a business buys new premises before selling the existing site. The assessment is the same in structure, with more attention to the saleability of the outgoing asset, its tenancy position and the realistic marketing period for that type of property.

Do I need to have sold before a lender will fund?

Not always. An open bridge, where the outgoing property is on the market but not yet under contract, is available through non-bank and private lenders at a higher cost. A contracted sale turns it into a closed bridge, which is cheaper and available more widely, so waiting for an exchange can be worth it.

What happens to the loan after the sale settles?

Sale proceeds reduce the facility, and what remains becomes the end debt. That end debt should already have been assessed as serviceable on ordinary terms, and it is usually refinanced into a standard facility at that point. If the end debt was never tested, that is a problem waiting at the end of the bridge.

Can a bridge cover stamp duty and costs?

Usually, provided the total stays within the lending limit against the combined security. Duty, legal costs, valuation and establishment fees all form part of peak debt, so they need to be in the calculation from the start rather than discovered close to settlement.

Credentials

Credit Representative 554029
ABN 20 672 801 651
FBAA member
AFCA external dispute resolution

Other ways we can help

Reading

Worth understanding first

All of business finance

Where we work

Two dates, one gap

Tell us what is happening and when. If a bridge fits, we will size it properly, with a buffer, and plan the exit from day one.

Or call us