Bridging loans to buy before you sell
Found your next South West Sydney home before selling this one? A bridging loan can help you buy first and sell second.
Found the one before you've sold? You don't have to miss out.
The right home has a habit of turning up at the wrong time. If you've found your next place but haven't sold your current one, a bridging loan can cover the gap.
At Infinity Mortgage Brokers, we help home owners across Bankstown and South West Sydney work out whether bridging finance makes sense, and set it up so the numbers stay comfortable.
How does a bridging loan work?
A bridging loan is short-term finance that lets you buy your next home before your current one has sold. Here's how it usually works:
- The lender combines your existing loan and the new purchase into one facility
- Interest is often added to the loan during the bridging period
- You get time to sell your current home, typically six to twelve months
- The sale proceeds pay the loan down
- What's left becomes your ongoing home loan
We'll model the whole thing before you make an offer, so you know exactly where you'll land.
Is a bridging loan right for me?
It can be - if you have enough equity and a realistic view of what your home will sell for. Bridging lets you buy without a sale condition, which can make your offer stronger.
The risk is time. If your home takes longer to sell, interest keeps adding up. We plan on a conservative sale price and a longer selling period, so there's room to breathe.
How Infinity Mortgage Brokers can help
We help South West Sydney families move without the stress of perfect timing. Here's what you get with us:
- A clear picture of your equity and borrowing position
- Your peak debt and end debt worked out up front
- Lenders compared on bridging terms, not just rates
- A plan B if your sale takes longer than expected
- Support through both settlements
We'll tell you honestly whether to buy first or sell first.
Found your next home already?
Let's chat! Schedule a free introductory call with us now.
How does a bridging loan work when buying in South West Sydney?
A bridging loan is short term finance that lets you buy your next home in South West Sydney before the sale of your current one has completed. It covers the gap between the two settlements.
Peak debt
The lender adds what you owe on your existing home to the price of the new one and the purchase costs. That combined figure is your peak debt, and interest added during the bridging period increases it.
During the bridging period
The period usually runs six to twelve months. Interest is generally capitalised, meaning it is added to the balance, so you are not making two full repayments.
After your home sells
The sale proceeds pay the balance down to your end debt. That end debt then continues as a normal principal and interest home loan.
Modelling it first
Infinity Mortgage Brokers models peak debt and end debt before you make an offer, whether you are moving from Narwee to Lugarno or across the street. Our guide to bridging loans has more detail.
Do I have to sell my home before using a bridging loan?
No, you do not have to sell your home before using a bridging loan. Bridging finance is designed for owners who find the right property first and sell afterwards.
Why buyers use it
In family suburbs such as Picnic Point, Lugarno and Illawong, the right home may not come up often. A bridging loan lets you act when it does, without a sale condition on your offer.
Closed bridging
This applies when your current home is already under contract with a settlement date. Lenders prefer it because the sale price and timing are known.
Open bridging
This applies when you have not yet sold. Terms are tighter because the sale date and price are uncertain, and lenders usually want more equity.
Choosing between them
Infinity Mortgage Brokers in Bankstown compares both for your situation and tests whether the repayments stay comfortable. Our guide to buying before you sell sets out the differences.
How much can I borrow with a bridging loan?
How much you can borrow with a bridging loan depends on the equity in your current home and the price of the next one. The lender must also be satisfied you can service the debt left after your sale.
How the limit is calculated
The lender works out peak debt, being your existing loan plus the new purchase and costs. It then confirms that the end debt, after your sale, is affordable on your income.
The 80% guide
Most lenders want the end debt at or under 80% of the new home's value, so that no LMI is payable.
Why the sale price matters
A realistic sale price is essential, because every figure flows from it. An upfront valuation of your existing home gives a firmer starting point than an online estimate.
Getting your numbers
Dimitri at Infinity Mortgage Brokers models peak debt for home owners across Bankstown, Roselands and Penshurst before they make an offer. See also how to access the equity in your home.
What happens to a bridging loan if my home takes longer to sell?
If your home takes longer to sell, interest keeps being added to the bridging loan, so each extra month increases what you owe. This is the central risk of bridging finance.
The effect on your equity
Capitalised interest raises the peak debt and reduces the equity you carry into the new loan. Your end debt, and your repayments, finish higher than planned.
If the term runs out
The lender may grant an extension, but it does not have to. Without one, you may need to sell at the best available price or refinance.
How to lower the risk
Price the property to meet the market, list it before you settle on the new one, and keep a cash reserve for the unexpected.
Planning conservatively
Infinity Mortgage Brokers bases bridging plans for South West Sydney sellers on a conservative sale price and a longer selling period than expected. Our guide to buying before you sell explains the safeguards.
