How Bridging Loans Work – The Process, Step by Step
A bridging loan is short-term finance secured against real estate, designed to bridge the gap between a financial need and incoming funds, most commonly the gap between buying a new property and receiving the sale proceeds from your existing one. You borrow against the equity in your property; the loan runs for a set term and is repaid in full when the property sells or when longer-term finance is arranged.
For a full explanation of what bridging loans are and when they’re used, read our overview on how bridging loans work.
How a Bridging Loan Works in Practice
Understanding how bridging loans work in Australia comes down to one core mechanic: you're borrowing against equity you already hold, for a defined period, with a clear plan to repay at the end.
You borrow against your existing property equity
Your lender assesses how much equity is available in your security property: the difference between what the property is worth and what you currently owe against it. Mango Mortgages lends up to 80% LVR for consumer loans on metro properties, and Mango Credit lends up to 70% LVR for business loans.
Interest accrues during the bridging period
Bridging loans are interest-only during the loan term. With Mango Credit and Mango Mortgages, interest is capitalised into the loan, meaning you don't make out-of-pocket repayments while the loan is active. The interest is repaid at the end, as part of the principal.
You carry “peak debt” during the bridging period
If you're buying before you sell, your total debt at its highest point (peak debt) includes both your existing mortgage and the bridging loan. Once your property sells, the proceeds will clear the debt.
The loan is repaid at the end of the term
For consumer loans with Mango Mortgages, the exit strategy must be the sale of the security property. For business loans with Mango Credit, repayment can also be made through refinancing or business cash flow. Either way, the repayment event is clearly defined before the loan starts.
Loan terms run from 2 to 24 months
Bridging loans are short-term by design. How they work and their terms are structured around your specific situation: the time needed to sell, settle, or arrange the next stage of finance.
The Bridging Loan Application Process
One of the most common questions we hear is: How long does the bridging loan application process actually take? With Mango Credit, most borrowers receive funds within 3–5 working days of their application.
Typical time from application to funds in your account.
Enquire
Contact us online, by phone at (02) 9555 7073, or apply directly online. Tell us what you need the funds for, how much you're looking to borrow, and what property you're considering as security.
Receive an Indicative Quote
We review your property details, equity position, and exit strategy, then provide an indicative offer outlining the loan amount, interest rate, term, fees, and proposed security structure. Everything is laid out clearly before you commit, and our team typically gets back to you within 24 hours of enquiry.
Accept the Letter of Offer
If you're happy with the terms, we issue a formal letter of offer. You sign and return it along with any required documents (typically a council rates notice and your current mortgage statement).
Security Documents Prepared
Our solicitors prepare the security documentation and issue it to your solicitor for review and execution. Our solicitors will require a minimum of one full business day to prepare and issue the documents. Once issued, you’ll need to meet with your solicitor to receive legal advice and execute the documents.
Valuation (If Required)
In some cases, Mango Credit and Mango Mortgages will require a formal property valuation. This is not always required, but may be necessary depending on the loan amount, LVR, location or property type.
Settlement and Funding
Once the security documents are correctly executed and returned to our solicitors, funds are transferred electronically to your nominated account, usually within one business day.
The entire process from acceptance to settlement takes about 3–5 working days in most cases.
How the Short-Term Loan Process Works
Bridging loans are one type of short-term property finance, but they're not the only one. All short-term property loans with Mango Credit and Mango Mortgages follow the same core process:
Short-term property loans suit borrowers who need capital quickly, don't fit standard bank criteria (whether due to self-employment, imperfect credit, limited documentation, or the nature of the loan purpose), or are bridging a timing gap, like funding a renovation, accessing working capital, or acting on a time-sensitive opportunity.
Security can be taken as a first mortgage, a second mortgage, or a caveat, depending on your property's position. The assessment always centres on the equity available and the strength of your exit strategy.
How the Caveat Loan Process Works
A caveat loan is a short-term loan secured by lodging a caveat on your property title. It is a legal notice that prevents the property from being sold or further encumbered without first satisfying the loan.
At Mango Credit and Mango Mortgages, our caveat loan process is only available in limited circumstances – most commonly where consent is required from the first mortgagee to register a second mortgage.
In these cases, a caveat is lodged on the title first while that consent is being sought, with the intention of converting to a second mortgage once consent is received. The caveat is removed from title once the loan is repaid or the security structure is updated.
Is a Bridging Loan Right for You?
It may suit you if:
- You have meaningful equity in your security property
- Your property is in a metro area and is realistically saleable within your loan term
- You have a clear, defined exit strategy. For consumer loans, this must be the sale of the security property
- You need to move faster than a bank can manage
Conditions to consider in a bridging loan process:
- Interest capitalises over the loan term, so the longer the bridging period runs, the higher the total cost
- If your property takes longer to sell than expected, you may face extension costs or pressure to accept a lower offer
- Security is required – all Mango Credit and Mango Mortgages loans are backed by Australian real estate
If you're unsure whether bridging finance is the right structure for your situation, our team is happy to talk it through honestly. If it's not the right fit, we'll say so.
FAQs
How long does a bridging loan last?
Mango Credit and Mango Mortgages offer bridging loan terms from 2 to 24 months. The term is structured around your specific exit: the time needed to sell, settle, or arrange longer-term finance. Minimum terms vary by loan type, so it's worth discussing your timeline with our team.
How quickly can I get funded?
Most borrowers receive funds within 3–5 working days from application. Indicative approval typically comes within 24 hours of enquiry. We move fast, but we don't promise instant approval.
Do I repay the whole loan before the term ends?
No. Our bridging loans are interest-only during the loan term, with interest capitalised rather than paid monthly. The full principal and accrued interest are repaid at the end of the term, typically when your property settles or refinancing is arranged.
Can I apply before I've sold my property?
Yes. This is an open bridging loan in which the security property hasn't yet been sold. The key requirement is that you have a realistic, clearly defined intention to sell the security property to repay the loan.
Do you do a credit check or an income assessment?
No. Mango Credit and Mango Mortgages do not run credit checks or assess income at any stage of the bridging loan application process. Your credit file is not accessed and will not be affected by your application. The assessment focuses entirely on your property equity and exit strategy.
What can I use as security?
Security must be in Australian real estate. Depending on your property position, Mango Credit and Mango Mortgages can structure the loan as a first mortgage, second mortgage, or caveat loan. Metro properties are generally accepted. Non-metro properties are assessed on a case-by-case basis.
Disclaimer: This page is for general information purposes only and does not constitute financial advice. Every person's financial situation is different, and you should seek advice from a licensed financial adviser before making decisions about borrowing against your property. Mango Credit and Mango Mortgages provide short-term loans secured by real estate but do not provide financial planning or investment advice.