What is the difference between capitalised and non-capitalised bridging?

This is the decision that changes everything. With capitalised bridging, the lender adds the interest for the bridging period onto the loan — you make no repayments during the bridge, and the interest is paid out of the sale proceeds when your old home sells. St George does this, capitalising up to twelve months of interest, which is why it's popular with people who don't have spare cash flow during the move. With non-capitalised bridging, you continue to service (or hold funds to cover) the interest during the bridge. ANZ works this way, and in exchange its bridging is the cheapest on the market — it charges no bridging fees or rate loading and prices roughly 2% below the capitalising lenders, but you need to hold the interest funds in an ANZ account for the bridging period. Cheapest-but-you-fund-it versus more-expensive-but-hands-off is the real trade-off.

Do lenders assess bridging on the peak debt or the end debt?

The good ones assess on the end debt, and that's the whole game. The peak debt — your existing loan plus the new purchase combined — is large and would fail most serviceability tests on its own. The lenders that write bridging well assess your ability to service the end debt (the loan that remains after your old property sells), treating the bridge as a temporary structure that the sale will clear. ANZ and St George both assess on end debt. What you also have to show is that the sale will realistically cover the gap — lenders apply a conservative sale figure and want headroom between the expected net sale proceeds and the peak debt, so you're not left short if the old place sells for less than hoped.

Which lenders are best for bridging loans?

It depends on cash flow and the shape of the deal. ANZ is the cheapest — no bridging fees, no rate loading, roughly 2% below the capitalising lenders — but it doesn't capitalise, so you hold the interest funds during the bridge, and it caps the loan-to-value ratio around 80%. St George capitalises up to twelve months of interest (no repayments during the bridge) and lets you keep any surplus from the sale; bridging is a meaningful part of its book and, usefully, its branches can't write bridging for non-customers, so a broker is often the only way in. Bridgit (via Connective Bridge) handles the outside-the-box cases — including taking only your current property as security — where a major bank won't. Orde also capitalises (six months with a contract of sale, twelve without). The right lender turns on whether you can fund the interest, whether you've sold yet, and how clean the security is.

What is the difference between open and closed bridging?

Closed bridging is where you already have an unconditional contract of sale on your existing property — the sale is locked in, the timing and amount are known, and the bridge is low-risk, which is why lenders give the shorter, cheaper terms (often up to six months). Open bridging is where you've bought but haven't yet sold — the sale price and timing are uncertain, so lenders allow a longer window (up to twelve months) but assess more conservatively and want clear headroom between the expected sale proceeds and the peak debt. Open bridging is where the discipline matters most: pricing the sale realistically, building in a buffer, and having a plan if the old property takes longer to sell than expected.

How long can a bridging loan last?

Typically up to six months if you already have a contract of sale on your existing property (closed bridging), and up to twelve months if you haven't sold yet (open bridging). ANZ offers flexible terms from one to twelve months, with three to six months being the common sweet spot. The bridging period is meant to be short — it's a structure to get you through the overlap between buying and selling, not a long-term loan. If the old property hasn't sold by the end of the bridging period, the situation needs managing before you get there, which is exactly why the sale assumptions and the buffer matter at the start.

How much can I borrow with a bridging loan?

The constraint is usually the loan-to-value ratio across the combined security during the peak-debt period and the serviceability of the end debt afterwards. ANZ, for example, caps the bridging loan-to-value ratio around 80%. The practical limit is the headroom between your peak debt (existing loan plus new purchase plus costs) and the conservative expected net proceeds from selling your existing home — the lender wants comfort that the sale clears the bridge with room to spare. We run the peak-debt and end-debt numbers, apply the lender's sale haircut, and confirm both the LVR at peak and the serviceability of the end debt before you commit to the new purchase.

Is a bridging loan a good idea?

It's the right tool when the alternative — selling first and renting, or missing the home you want — is worse, and when the numbers have headroom. Bridging removes the pressure to sell in a hurry (which often means selling for less) and lets you secure the next home. The risks are real, though: if your existing property sells for less than expected or takes longer than the bridging period, you can be exposed, and capitalised interest compounds the longer the bridge runs. The decision comes down to a realistic sale price, a sensible buffer, the right structure (capitalised or not), and a clear timeline. Done with those in place, bridging is a clean solution; done on optimistic sale assumptions, it's where people get caught.

Bridging · buy before you sell · peak vs end debt

Bridging loans — buy before you sell, and the one decision that changes everything.

Q: How does a bridging loan work?

A bridging loan lets you buy your next home before your current one has sold. The lender combines the debt on your existing property with the new purchase into a 'peak debt' for a bridging period — commonly up to six months if you've already got a contract of sale, or up to twelve months if you haven't. When your old property sells, the sale proceeds pay down the peak debt, leaving the 'end debt' — the loan you keep on the new home. The two things that decide whether bridging suits you are how the interest is handled during the bridge (capitalised by the lender, or held and serviced by you) and whether the lender will assess the loan on the end debt rather than the much larger peak debt. We model both before you commit to a purchase.

Bridging finance carries you through the overlap between buying your next home and selling your current one. The mechanics are straightforward, but one choice decides whether it suits you: does the lender capitalise the interest (you make no repayments and it's paid from the sale), or do you hold and service it during the bridge in exchange for a much cheaper rate? This page sorts that out, explains why the good lenders assess on end debt not peak debt, and maps the panel.

The short version

The fork is capitalised vs not. St George capitalises up to 12 months of interest (no repayments, paid from the sale) — hands-off but dearer. ANZ doesn't capitalise, so you hold the interest funds — but it's the cheapest, roughly 2% below the capitalising lenders, with no bridging fees.

The good lenders assess on the end debt (what's left after the sale), not the much larger peak debt. Bridgit (Connective Bridge) handles single-security and outside-the-box cases the majors won't.

Peak debt, end debt, and the bridging period

Two numbers and a clock. Get these straight and bridging stops feeling complicated.

During the bridge, the lender combines your existing loan and the new purchase into a single peak debt for a defined period — commonly up to six months with a contract of sale on your old place, or up to twelve months without one. When the old property sells, the proceeds pay the peak debt down to the end debt — the loan you keep on the new home. The whole structure only works because the right lenders assess your serviceability on the end debt, treating the bridge as temporary, rather than testing you against the peak debt that no one could service. The other side of the coin is the sale assumption: lenders apply a conservative figure to your expected net proceeds and want clear headroom over the peak debt, so you're not left short if the old place sells for less than hoped.

The fork: capitalised vs serviced interest

This is the decision. It's a straight trade between cost and cash flow.

Lender	Interest during bridge	Why you'd choose it
ANZ	Not capitalised — you hold the interest funds in an ANZ account during the bridge	Cheapest — no bridging fees or rate loading, ~2% below the capitalising lenders; flexible 1–12 months (3–6 sweet spot); ~80% LVR cap; assesses end debt
St George	Capitalised — up to 12 months of interest added; no repayments during the bridge	Hands-off cash flow; keep the sale surplus; branches can't write it for non-customers, so a broker is often the only way in; assesses end debt
Orde Financial	Capitalised — 6 months with a contract of sale, 12 without	Where the majors' policy doesn't fit; needs equity to capitalise into
Bridgit (Connective Bridge)	Capitalised, single-security capable	Outside-the-box cases — can take only your current property as security where a major won't

Cheaper isn't automatically better

ANZ's no-loading bridging is the cheapest on rate, but only if you can comfortably hold the interest funds for the bridging period. If a few months without bridging repayments is what makes the move workable, St George's capitalised structure can be the right call even at a higher rate. The "best" lender is the one whose structure fits your cash flow — we model both.

Open vs closed bridging — and where people get caught

Whether you've already sold changes the terms and the risk.

Closed bridging — you have an unconditional contract of sale on your existing property. The timing and amount are known, the risk is low, and lenders give the shorter, cheaper terms. Open bridging — you've bought but haven't sold. Lenders allow a longer window (up to twelve months) but assess more conservatively. Open bridging is where discipline matters: price the sale realistically, build in a buffer, and have a plan if the old property takes longer to move than expected. Bridging done on optimistic sale assumptions is exactly where the trouble starts; done with a conservative sale figure and headroom, it's a clean way to avoid selling in a hurry for less than the home is worth.

Let's run the peak and end debt before you commit.

We'll model both structures (capitalised and serviced) on your numbers, apply the lender's sale haircut, check the LVR at peak and the serviceability of the end debt, and place it with the lender whose structure fits your cash flow.

Plan a bridge → Borrowing capacity calculator →

What this page is, and what it isn't.

This is general information about credit, not personal credit advice. Bridging terms, rates, LVR caps and the capitalisation periods described are indicative, vary by lender and file, and are confirmed before any application. Bridging carries real risk if your existing property sells for less or later than expected — your full situation, sale assumptions and requirements are assessed before any loan is recommended or accepted.

Bridging loan questions

How does a bridging loan work?

It carries you through buying before selling. The lender combines your existing loan and the new purchase into a peak debt for up to 6 months (with a sale contract) or 12 months (without); when the old place sells, proceeds reduce it to the end debt you keep. The good lenders assess on the end debt, not the peak.

Capitalised vs non-capitalised — what's the difference?

Capitalised (St George, up to 12 months): the lender adds the interest, you make no repayments, it's paid from the sale — hands-off but dearer. Non-capitalised (ANZ): you hold/service the interest during the bridge, but it's the cheapest (~2% under, no bridging fees). Cost vs cash flow.

Do lenders assess peak debt or end debt?

The good ones assess the end debt — the loan left after the sale — treating the bridge as temporary. They also apply a conservative sale figure and want headroom over the peak debt so you're not left short.

Which lenders are best?

ANZ (cheapest, doesn't capitalise, ~80% LVR), St George (capitalises 12 months, keep the surplus, broker-only since branches can't write it for non-customers), Orde (capitalises 6/12 months), Bridgit (single-security and outside-the-box). Choice depends on cash flow and whether you've sold.

Open vs closed bridging?

Closed = you have an unconditional sale contract (lower risk, shorter/cheaper terms). Open = bought but not sold (longer window to 12 months, assessed more conservatively). Open bridging is where realistic sale pricing and a buffer matter most.

How long can it last?

Up to 6 months with a sale contract, up to 12 without; ANZ runs 1–12 months with 3–6 the sweet spot. It's a short-term overlap structure, not a long-term loan.

Is bridging a good idea?

It's the right tool when selling first (and renting) or missing the home is worse, and when the numbers have headroom. The risk is a slow or low sale, and capitalised interest compounds the longer it runs — so realistic sale assumptions, a buffer and the right structure are everything.

Primary sources

ASIC MoneySmart — Types of home loans — independent guidance, including bridging finance.
ASIC — Responsible lending (RG 209) and the National Consumer Credit Protection Act 2009 — the serviceability obligation on the end debt.
ASIC MoneySmart — Buying and selling at the same time — the consumer view of the overlap.
AFCA — the external dispute scheme.

Richard Esteb

Licensed mortgage broker · Credit Rep #574071

Esteb & Co — authorised under Connective (ACL #389328)

Bridging is mostly a numbers-discipline job. The mechanics are simple; the value is choosing the structure that fits your cash flow, assessing on a conservative sale figure with real headroom, and placing it with the cheapest lender whose policy the deal actually fits — so the bridge does its job and clears cleanly when the old place sells.