Is a bridging loan right for you?

Recently updated on May 7th, 2026 at 05:02 pm

You’ve found your dream property, but your existing home hasn’t sold yet. It’s a situation many Australians face, and it creates an immediate tension: do you let the opportunity go, or is there a way to move forward without waiting?

That’s exactly where bridging loans come in. A bridging loan is a short-term loan secured against real estate that gives you access to funds during the gap between property transactions – most often while you’re in the process of selling a property.

This article covers what a bridging loan is, how it works in Australia, what it costs, who it suits, and when it might not be the right fit, so you can make an informed decision.

Key Insights

• A bridging loan is a short-term loan secured against real estate that lets you access equity while your home is in the process of being sold
• Repayments are typically interest-only during the bridging period, with the loan repaid in full from your sale proceeds at settlement. With Mango Credit, interest is capitalised, meaning it accumulates and is repaid in full at the end of the loan term. Borrowers are not required to make any repayments during the bridging period
• Borrowing capacity is determined by the equity in your property. Most lenders, including Mango Credit, lend up to 80% LVR*
• Bridging loans carry higher interest rates than standard home loans, so it’s important to factor in the full cost before proceeding
• For consumer borrowers, the exit strategy must be the sale of the security property
• Private lenders like Mango Credit can settle in as little as 3 to 5 business days, with no credit check, no income assessment, and no upfront fees

*Maximum LVR is subject to a number of factors, including property location, property type, and existing debt levels. Speak with the Mango Credit team to understand what applies to your situation.

What is a Bridging Loan and How Does It Work?

A bridging loan is a short-term loan (typically secured against real estate) that provides access to funds during a defined period while a property transaction is underway.

So, how does a bridging loan work? Unlike a standard home loan, bridging finance isn’t designed to be held long term. It’s structured to fill a specific timing gap, with the expectation that it’ll be repaid from the proceeds of a property sale.

Open vs Closed Bridging Loans

• A closed bridging loan has a defined repayment date, usually because a sale contract is already in place and settlement is confirmed. These carry less uncertainty for the lender and are generally more straightforward to assess.
• An open bridging loan doesn’t yet have a confirmed sale date. The property is either on the market or will be listed shortly. These are more common but typically come with tighter conditions around LVR and loan term.

Loan terms

Bridging loans are short-term by design. Most banks and lenders offer terms of 6 to 12 months. Mango Credit offers loan terms of up to 24 months, depending on the loan type and circumstances.

Who provides bridging loans?

Bridging finance is available through banks, non-bank lenders, specialist lenders, and private lenders. Each has different assessment criteria, documentation requirements, and approval timelines. 

Private lenders tend to move faster and with fewer documentation hurdles than traditional banks, because the short-term bridging loan is assessed primarily on the equity in your property rather than your income or credit history.

How Much Can You Borrow with a Bridging Loan?

Your borrowing capacity for a bridging loan is determined by the equity you hold in your existing property, which is the difference between its current market value and what you still owe on it.

Most lenders cap bridging loans at a maximum LVR (loan-to-value ratio) of 80% of the security property’s value. Mango Credit lends up to 80% LVR for consumer loans secured against metropolitan properties. The maximum LVR depends on several factors, such as property location, property type, and existing debt levels.

Let’s say your current property is valued at $900,000, and you have an existing mortgage of $300,000:

• Property value: $900,000
• Existing mortgage: $300,000
• Available equity: $600,000
• 80% of $900,000 = $720,000 maximum lending
• Less existing mortgage: $300,000
• Maximum additional borrowing: up to $420,000

The actual amount and your bridging loan eligibility will depend on the specific property, its location, and the lender’s assessment.

Bridging Loan Interest Rates and Fees

Bridging loans typically carry higher interest rates than standard home loans. This reflects their short-term nature, faster approval process, and the fact that they’re often assessed with minimal documentation.

How Interest is Structured

Most bridging loans are priced at a monthly rate expressed as an annual percentage (APR). Because you’re only paying for the time you hold the loan, the total interest cost depends heavily on how quickly your property sells and settles.

Repayments during the bridging period are commonly structured in one of two ways:

• Interest-only repayments: You pay interest monthly and repay the principal when the property sale settles
• Capitalised interest: Interest accumulates and is repaid in full at the end of the loan term, reducing cash flow pressure during the bridging period

Note: Mango Credit offers capitalised interest only. Meaning, borrowers do not make repayments during the loan term, with all interest repaid at settlement. 

Contact Mango Credit directly for current rate information, as rates are subject to market conditions and individual loan circumstances.

Common Fees to Look For

When comparing bridging loans, look beyond the interest rate. Fees that may apply across different lenders include:

• Establishment fees to set up the loan and register the security
• Valuation fees to assess the value of the security property
• Legal fees for loan documentation
• Exit or discharge fees charged by some lenders when the loan is closed

Benefits of Bridging Finance

Bridging loans solve a specific problem: the timing gap between property transactions. Here’s where they can help.

Buy Before You Sell

Bridging finance lets you act on the right property without waiting for your existing home to settle. You can take the time to prepare your property properly for sale, rather than accepting the first offer that comes in just to meet a deadline.

Avoid Temporary Housing and Double Moves

Selling first often means a period in rental accommodation, with the associated costs of removalists, storage, and temporary leases. With a bridging loan, you can move directly from one property to the next.

Pre-Sale Renovations to Increase Your Sale Price

One of the more practical applications of bridging finance is funding renovations or repairs before selling. Updating a kitchen, refreshing a bathroom, or landscaping a garden can meaningfully increase a property’s market value. You borrow against your equity, complete the work, sell for a higher price, and repay from the proceeds.

Fast Approval

Banks typically require income documentation, tax returns, and a full credit assessment. With non-traditional lenders, loans are assessed on property equity, often without needing a credit check or financial statements. Settlement typically occurs within 3 to 5 working days from application.

No Early Repayment Penalties

With selected lenders, once your property settles and funds come through, you can repay in full from the first month without penalty.

At Mango Credit, this applies to consumer bridging loans only. Business bridging loans will incur fees on early repayment. Borrowers are advised to read their Letter of Offer and loan documentation carefully to fully understand the repayment terms that apply to their loan.

Risks and Drawbacks to Consider

Bridging finance is a useful tool in the right circumstances, but it comes with risks that are worth understanding before you proceed.

Higher Interest Rates Than Standard Home Loans

The convenience and speed of a bridging loan come at a cost. Rates are higher than a traditional mortgage, and while you’re only paying for a short period, those costs add up, particularly if the sale drags on longer than expected.

What If The Property Takes Longer to Sell?

This is the most significant risk. If your property doesn’t sell within the bridging period, monthly interest payments will be required from your own funds in order to extend the loan on a month-by-month basis. Payments are due at the start of each monthly cycle. Should you need an extension, reach out to the Mango Credit team to discuss your options.

Before committing, consider the full timeline realistically on how long it takes to sell and repay from the sale proceeds. Take into account how long it may take to find a buyer, your property’s market appeal and current conditions, as well as the settlement period after a contract of sale is signed (which can be up to 90 days). Ensure you have enough time and resources to cover this entire period.

Holding Costs on Two Properties

During the bridging period, you may be responsible for two sets of council rates, insurance premiums, body corporate fees, and utilities. Don’t underestimate these ongoing costs; plan for them instead.

Your Property May Sell for Less Than Anticipated

If the sale price is lower than expected, your end debt will be larger. A realistic view of your property’s value, ideally informed by a formal valuation, is important before you commit to a specific loan amount.

Loan Terms Are Finite

Bridging loans have a defined end date. Communicate with your lender early if your situation changes and the sale looks like it may take longer than planned.

Who is a Bridging Loan Best Suited For?

Bridging loans work well in specific circumstances. They’re typically a good fit for:

• Homeowners upgrading or downsizing who want to secure their next property before their existing home settles
• Buyers who’ve found the right property and can’t afford to let it go while waiting for their sale to complete
• Property investors who are restructuring their portfolio
• Property owners planning to sell who need short-term funds to carry out pre-sale improvements, such as renovations that will increase the property’s market value
• Business owners who need short-term capital secured against property equity and don’t qualify for traditional bank finance due to documentation gaps, limited trading history, or other non-conforming factors. Note that while business borrowers may have alternative exit strategies (such as refinancing or business cash flow), they must also be prepared to sell the security property and repay the loan from the sale proceeds if those alternatives do not eventuate.
• Borrowers who need to move quickly – when a bank’s approval timeline of four to eight weeks simply isn’t compatible with the opportunity at hand
• Borrowers who may not qualify for bank bridging finance, as they are self-employed

A Bridging Loan May Not Be Right If:

• You’re a consumer borrower with no intention to sell the security property
• Your property is in a slow or uncertain market, and you’re not confident about the sale timeline
• The interest cost outweighs the benefit in your specific situation
• You’re not comfortable with the risks associated with holding two simultaneous loans

Bridging Loan vs Other Options

Before committing to bridging finance, it’s worth comparing the alternatives.

Each option has its place. The right choice depends on your specific timeline, property equity, financial position, and what you’re trying to achieve.

How to Apply for a Bridging Loan with Mango Credit

The application process with Mango Credit is straightforward.

Step 1: Enquire and discuss your situation

Contact the Mango Credit team by phone, email, or through the online form. There are no upfront fees and no pressure to proceed. The team will take the time to understand your circumstances and whether a bridging loan is the right fit.

Step 2: Provide property details

You’ll share the basics: the security property address, an estimate of its value, any existing mortgage balance, and confirmation that you intend to sell the property (the required exit strategy for consumer loans).

Step 3: Property valuation

An independent valuation is arranged to confirm the available equity and determine the maximum loan amount. No income documents, tax returns, or financial statements are required.

Step 4: Loan documentation and approval

Once assessed, loan documents are prepared and issued. No credit check is conducted, and your credit file is not affected.

Step 5: Settlement 

Settlement typically occurs within 3 to 5 working days from application – significantly faster than the standard bank timeline.

Explore If a Bridging Loan Works for You

Bridging loans give you the ability to act on a property opportunity or access your equity before a sale settles, without the lengthy assessment process required by a bank.

Whether they’re right for you depends on your individual situation: the equity available in your property, your confidence in the sale outcome, your timeframe, and whether the loan’s cost is proportionate to what it enables.

Mango Credit has been helping Australians access short-term property finance for over 20 years. There are no upfront fees, no pressure to proceed, and the team takes the time to understand what you actually need.

If you’d like to explore whether a bridging loan suits your circumstances, call (02) 9555 7073, email info@mangocredit.com.au, or apply online.

FAQs About Bridging Loans

What is a bridging loan?

A bridging loan is a short-term loan secured against real estate that provides access to funds during a defined period – most commonly while a property is being sold. It’s designed to bridge the timing gap between transactions, not to serve as long-term finance.

How does a bridging loan work in Australia?

Bridging finance in Australia allows you to draw on the equity in your existing property before it sells. You access funds, use them for your intended purpose, and repay the loan from the proceeds when your property settles. During the bridging period, you typically make interest-only repayments, or you can capitalise interest until the loan is repaid.

What are bridging loan interest rates in Australia?

Bridging loan rates are generally higher than standard home loan rates, reflecting the short-term and lower-documentation nature of the product. Rates vary by lender and are typically expressed as an annual percentage applied monthly. Contact Mango Credit directly for current rate details.

How long does a bridging loan last?

Most bridging loans run for 6 to 12 months. Mango Credit offers terms of up to 24 months, depending on the loan type and circumstances.

Can I get a bridging loan if I’m self-employed?

Yes. Mango Credit does not require income documentation or conduct a credit check. Loans are assessed on property equity, making them accessible to self-employed borrowers, contractors, and others who may not meet traditional bank criteria.

What happens if I can’t sell my property within the bridging period?

If your sale looks like it may run over the agreed term, contact your lender as early as possible. Mango Credit’s approach is to work with borrowers constructively – the goal is a good outcome, not a difficult one.

Can I use a bridging loan for business purposes?

Yes. Mango Credit offers bridging loans for both consumer and commercial purposes. For business loans in which more than 50% of the funds are used commercially, additional exit-strategy options beyond the sale of the property may be available.

How quickly can a bridging loan be approved?

Mango Credit typically offers quick approvals within 24 hours, and funding usually in 3 to 5 business days from application, making it substantially faster than most bank approval processes.

Do I need an exit strategy for a bridging loan?

Yes, all bridging loans require a defined exit strategy. For consumer loans through Mango Mortgages, the exit strategy must be the sale of the security property. This is a legal requirement to comply with the National Consumer Credit Protection Act 2009. For commercial loans through Mango Credit, other exit strategies may be considered.

Disclaimer: This article is for general information purposes only and does not constitute financial or investment advice. Bridging loans are a form of short-term business finance that should only be used when you have a clear, realistic exit strategy.

Every person’s financial situation is unique, and you should seek advice from a licensed financial adviser or mortgage broker before making decisions about property finance. Mango Credit provides short-term loans secured by real estate but does not provide financial planning, mortgage broking, or investment advice.