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Bridging the Gap

- Thursday, October 15, 2009

Bridging finance might just be the solution for your buying and selling cash flow concerns.

When you’re on the hunt for a new home, chances are the sale of your existing place is unlikely to align perfectly with the purchase of your new home.

That means that most sellers are faced with the daunting prospect of either shouldering the burden of two mortgages should they buy before their home has sold, or a stint in rental property while they find a new home.

If you can’t face the prospect of weeks or months living out of cardboard boxes in a short term rental or a motel, then a bridging loan may be the solution you’re looking for.

How does it work?

In general terms a bridging loan can be used to cover your financing requirements if the sale and purchase settlement dates of properties differ by a short period. It can also offer you a solution for a longer period of up to six or 12 months, if, for instance, you’ve found a new property but are yet to have sold your existing home or perhaps haven’t finished building your new one.

Like any home loan you will accrue interest on the amount borrowed. Your repayment requirements will depend on the lender but in most instances it will be interest only. In some cases no repayments will be required at all, but it is always wise to make repayments to avoid your interest obligations spiralling out of control.

To bridge or not to bridge

While it may sound like an ideal solution, bridging finance requires careful consideration – just like any other financial decision. Be sure to seek professional, sound advice tailored to your individual circumstances and needs. We can help you determine whether bridging finance is your best option, or if perhaps another solution, such as renting between properties, will work out better – so give us a call.

Benefits of bridging

  • You can buy a new home without worrying about selling your existing home first
  • If you’re building a new home you don’t have to worry about renting in between
  • There is less pressure to sell your existing home quickly, meaning you won’t be pressured into accepting a lower sales price


This article does not necessarily reflect the opinion of the author/s,  Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news cand information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.

David Carruthers is a credit representative (Credit Representative Number [400226]) of BLSSA Pty Ltd (Australian Credit Licence No. 391237).