Bridging Home Loan Wollongong

A bridging loan is short term finance that covers the gap between buying your next home and selling your current one. The lender combines both debts into a single facility, known as peak debt, which you draw on until the existing property sells.

During the bridging period most lenders capitalise the interest, meaning it is added to the loan rather than paid monthly, so you avoid carrying two full repayments at once. Once your existing home sells, the proceeds reduce the balance down to the end debt on your new home, which then reverts to a standard principal and interest home loan.

No. Bridging finance exists specifically for buyers who need to secure a new property before their current one has sold, which is common in tightly held Illawarra suburbs like Thirroul, Austinmer and Figtree where the right home rarely comes up.

Closed bridging applies when you have already exchanged on the sale of your existing home and have a settlement date, which lenders prefer. Open bridging applies when your current home is not yet under contract, and carries tighter terms because the lender cannot be certain when it will sell or for how much.

Bridging capacity is driven by the equity in your existing property and the value of the one you are buying. The lender calculates peak debt as your current balance plus the new purchase price and costs, then checks that the end debt, once your home sells, sits within normal serviceability and loan to value limits.

Most lenders want the end debt at or below 80% of the new property's value to avoid Lenders Mortgage Insurance. Because Illawarra values move at different rates between suburbs, an accurate appraisal of your existing home is the first step, and we can order upfront valuations before you commit.

This is the main risk in any bridging arrangement. While your existing home is unsold, interest continues to capitalise against the peak debt, so the longer the sale takes, the more the total debt grows.

If the property has not sold by the end of the bridging term, an extension may be available but is not guaranteed. To manage the risk, price your existing home realistically, have it on the market before you settle on the new one, and keep a cash buffer aside. We build a conservative sale assumption into your plan rather than the best case figure.