Bridging Finance in Australia: Non-Bank and Private Lenders
Property Lending
Non-bank lenders · Business purpose · Exit strategy
A bank caps the bridge at 12 months and assesses you on the debt you will be left holding. Non-bank and private funders work differently, and the difference starts with who is borrowing and why, not with what the lender calls itself.
Quick Answer
A bridging loan is short term property secured finance covering the gap between buying one property and selling or refinancing another, repaid from that lump sum rather than income. Peak debt and end debt decide it before any rate. Who writes it depends on whether it is regulated credit or business purpose.
Also known as: bridging loan, bridging finance, non bank bridging loan, short term property loan.
On this page
- Where are you up to, and which page answers it?
- Is your bridging loan regulated credit or a business purpose loan?
- How do you calculate peak debt and end debt on a bridging loan?
- What does a bridging loan actually cost?
- Which lenders still write bridging loans in Australia?
- What does a non-bank or private lender need from you?
- Do you make repayments on a bridging loan?
- How long does a bridging loan take, from application to the end of the term?
- How do you check a short term property lender before you sign?
- Do you actually need a bridging loan?
- Frequently Asked Questions
Where are you up to, and which page answers it?
| Where you are | What actually decides the next step | Where it is answered |
|---|---|---|
| You have bought, the contract is unconditional, and settlement is weeks away | Whether a lender can complete in the time left. That is a documents and consents question before it is a credit question, and an existing mortgage over either property is usually the long pole | How fast a bridging loan can settle |
| You are trying to work out whether the numbers even work | Peak debt and end debt. Peak debt decides whether a lender will approve it, end debt decides what you are left carrying, and neither is the figure most calculators show you | How to calculate peak debt and end debt |
| A bank has declined you on servicing | Whether the next lender applies the same test. A bank assesses you on the total debt during the bridge, and the non-bank and private lanes do not test it the same way | Why banks decline bridging loans, then what to do next |
| Your existing property is not sold, and may not even be listed yet | Whether you are asking for an open or a closed bridge. That single distinction changes the term, the evidence required and the price, and almost nothing published tells you which one you are being quoted | Open or closed bridging |
| You are bidding at auction on Saturday | Whether your finance is unconditional before you raise your hand, because an auction contract normally is not subject to finance and the deposit falls due on the day | Bidding at auction with a bridge |
| The purchase is commercial, or the money is for the business | Whether the loan sits inside or outside the National Credit Code, and what you give up on the outside of it | Regulated credit or business purpose |
| You have a term sheet and want to know whether the numbers are comparable | What the loan to value ratio is measured on, and whether the rate is quoted per month or per year. Both differ between quotes that otherwise look identical | What 80% LVR is measured against |
| You are still deciding whether you need a bridge at all | Whether the timing problem can be solved inside the contract instead, with a subject to sale clause, a longer settlement or a simultaneous settlement | Whether you need one |
| You have listed, or are about to, and need money before the sale settles | Whether the sale is real enough to lend against: a signed agency agreement, a valuation rather than an asking price, and a hold back against the balance | Bridging loan until your property sells |
| Your bridge has expired, or expires inside 30 days, and the property has not sold | Which of the three ways out is still open, and what the payout figure has become since maturity | Bridging loan expired and not sold |
| You hold a term sheet and want to know what each line costs | Rate against comparison rate, the fee stack, and whether interest is prepaid, budgeted or capitalised | Rates, fees and the term sheet decoded |
| The money is for the business: a settlement, premises, an ATO debt or an expiring facility | Whether a private funder will accept your exit evidence, and what a business purpose declaration does to your protections | Private bridging loans for business |
Is your bridging loan regulated credit or a business purpose loan?
Which of the two you are in is set by 2 things: who the borrower is, and what the money is for. It is not set by whether the funder calls itself a bank, a non-bank or a private lender. Get that order right and most of the confusion on this topic disappears, because the legal category decides the protections you keep, the documents you sign and, in one important case, whether a statutory price cap applies at all. The business purpose side, including what a declaration can and cannot do, is worked through in private bridging loans for business; the situation where the money is needed before a listed property settles is bridging loan until your property sells.
There are 3 categories, and they are genuinely different products rather than 3 names for one product.
A regulated consumer credit contract under the Code
The National Credit Code is Schedule 1 to the National Consumer Credit Protection Act 2009. Section 5, headed "Provision of credit to which this Code applies", turns on 4 limbs at once: the debtor is a natural person or a strata corporation, a charge is made for the credit, the credit provider is in the business of providing credit, and the credit is provided wholly or predominantly for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance credit that was provided for those purposes. Section 5(4) settles what predominant means: the purpose for which more than half of the credit is intended to be used. If you are bridging between 2 homes, this is almost always your category, and the protections that come with it are the reason lenders in it ask for more paperwork.
A bridging finance contract, and the one carve out worth knowing
Buried in the same Code is a definition most borrower facing pages never mention. Section 204, headed "Principal definitions", says a credit contract is a bridging finance contract if, when the contract is made, the debtor reasonably expects to receive a lump sum before the term ends and intends to discharge their obligations so far as possible with that sum, the term of the contract is 2 years or less, and any conditions prescribed by the regulations are met.
That definition does work. Division 4A of the Code is headed "Annual cost rate of certain credit contracts", and section 32A, headed "Prohibitions relating to credit contracts if the annual cost rate exceeds 48%", stops a credit provider entering a credit contract whose annual cost rate exceeds 48%. Section 32A(4) then says the section "does not apply if: (a) the credit provider is an ADI; or (b) the credit contract is a low cost credit contract, small amount credit contract or bridging finance contract." Section 32AA carries the same carve out for later increases in the rate.
Read that carefully, because the detail matters more than the headline. It is the prohibition in that section that is disapplied, not the whole of the Code and not every consumer protection you hold. What it means in practice is that the statutory ceiling most borrowers assume sits under every regulated loan does not sit under a bridging finance contract. Nothing in this page turns that into a warning about any particular funder; it is a reason to read the total cost of the facility rather than to assume a cap is doing the work for you.
A business purpose bridge, outside the Code on a section 13 declaration
The third category is a bridge taken by a business or an investor for a business or non residential investment purpose. Here the Code does not apply, and the mechanism that takes it outside is a declaration. Section 13 of the Code, headed "Presumptions relating to application of Code", presumes credit is not provided for a Code purpose where the debtor declares before entering the contract that it is to be applied wholly or predominantly for a purpose that is not a Code purpose.
The declaration is not a free pass, and this is the part the published answers on this topic consistently leave out. Section 13(3) makes the declaration ineffective if, when it was made, the credit provider knew or had reason to believe, or would have known or had reason to believe had it made reasonable inquiries about the purpose of the credit, that the credit was in fact to be applied wholly or predominantly for a Code purpose. Section 13(4) then deems paragraph 5(1)(b) satisfied, which puts the contract back inside the Code after the fact. Section 13(5) adds that a declaration must be substantially in the form required by the regulations and is ineffective if it is not, and section 13(6) makes it an offence to induce a debtor to make a declaration that is false or misleading in a material respect.
The form itself is prescribed by regulation 68 of the National Consumer Credit Protection Regulations 2010, headed "Declaration of purposes for which credit provided". It sets the words of the declaration, and it requires a warning immediately below those words, or prominently displayed at the moment of an electronic signature, reading in part: "IMPORTANT. You should only sign this declaration if this loan is wholly or predominantly for: business purposes; or investment purposes other than investment in residential property. By signing this declaration you may lose your protection under the National Credit Code." It also requires each person's signature and a date.
The regulator has enforced exactly that reading. In April 2025 the Federal Court found that a business lender and a loan introducer had engaged in unlicensed credit activity, and the corporate regulator's account of the decision is that, in relation to one consumer, they "could not simply rely on the 'Business Purpose Declaration' procured from the consumer but had to undertake reasonable inquiries about the purpose for which the credit was provided" (media release 25-060MR, 16 April 2025). The High Court had already made the same point about paperwork in a different register. In Stubbings v Jams 2 Pty Ltd, decided 16 March 2022, the Court said of the certificates of independent advice put forward by the lenders that, given their "bland boilerplate language" and a statement of loan purpose the lender's representative must have known to be inaccurate, it was open to infer that the certificates were window dressing.
So the honest summary of the regulated versus unregulated question is one sentence long, and the instrument chooser covers the rest of it: a loan for business or investment purposes other than residential investment sits outside the Code, but the declaration that puts it there only works if it is true and if the lender tested it. What you actually give up by being outside the Code is set out under what protection you have on a loan outside the Code, and if you are not certain which side of the line your loan falls on, that is a question for your own solicitor before you sign rather than a box to tick at settlement.
| The test | Consumer credit contract under the Code | Bridging finance contract | Business purpose private bridge |
|---|---|---|---|
| Who the borrower is | A natural person or a strata corporation | A natural person or a strata corporation, as for any Code contract | Commonly a company or trust, or an individual borrowing for a business |
| What the purpose must be | Wholly or predominantly personal, domestic or household, or residential investment property | Same as the Code, plus the debtor expects a lump sum and intends to repay from it, and the term is 2 years or less | Wholly or predominantly business, or investment other than residential property |
| Does the 48% cap apply | Yes, section 32A applies to the contract | No, section 32A(4)(b) disapplies that section | No, the Code does not apply to the contract at all |
| Must the lender hold a credit licence and belong to the dispute scheme | Yes, both, and ASIC enforces the second by cancelling licences | Yes, this is still a Code contract | No, neither is required where the lender writes commercial loans only |
| What protection you keep or give up | The full set of Code protections, including hardship and default notice requirements | Code protections other than the disapplied rate prohibitions | The declaration warns you may lose your protection under the Code, and the declaration fails if the lender knew better |
How do you calculate peak debt and end debt on a bridging loan?
Peak debt is the loan you need on the new property, including purchase costs and less any cash you contribute, added to the mortgage still owing on the property you are selling. End debt is peak debt less the net proceeds of that sale. Work both out before you look at a single rate, because peak debt decides whether a lender will approve the facility at all, and end debt is the loan you are still holding after the bridge closes. A single example with the interest compounding month by month is in what capitalised interest costs on a bridge.
Most online calculators show you a monthly repayment, which on a bridging loan is frequently zero and tells you nothing. These 2 figures are the ones the credit team is actually looking at.
| Step | What goes in | Illustrative figure |
|---|---|---|
| 1. Price of the property you are buying | The contract price, before costs | $1,200,000 |
| 2. Add purchase costs | Transfer duty, legal costs, registration and your own inspection costs | $55,000 |
| 3. Subtract the cash you are contributing | Savings, a deposit already paid, or a gift | $100,000 |
| 4. That is the new borrowing required | Step 1 plus step 2, less step 3 | $1,155,000 |
| 5. Add the mortgage still owing on the property you are selling | The payout figure, not your statement balance | $350,000 |
| 6. Peak debt | Step 4 plus step 5. This is the number the lender assesses | $1,505,000 |
| 7. Expected net sale proceeds | Expected sale price less agent commission, marketing and legal costs | $878,000 |
| 8. End debt | Peak debt less step 7. This is the loan you keep | $627,000 |
Illustrative only, to show the method rather than any particular deal. Every figure varies with the property, the state and the lender, and none of this is a quote. Two things in that table are worth pausing on. Step 5 takes the payout figure rather than the balance on your statement, because the 2 are not the same and on a short loan the difference is real money. And step 7 is an estimate of something you do not control, which is why it needs stress testing rather than accepting, covered under what if the sale comes in lower or later.
What is the 80% LVR on a bridging loan actually measured against?
Nothing is standardised, and this is the number to interrogate rather than the percentage itself. Of the 13 lender pages read for this guide, 11 published a maximum loan to value ratio. The same headline 80% was being measured against 4 different denominators, and 3 of the 11 published a percentage without ever publishing what it was calculated on. A borrower comparing 2 loans on the percentage alone is comparing nothing.
Run the illustrative deal above through 2 of those bases and the point makes itself. Peak debt of $1,505,000 against the combined value of both properties, $2,100,000, is 71.7%. End debt of $627,000 against the property being kept, $1,200,000, is 52.3%. Same deal, same day, same borrower, and a difference of nearly 20 percentage points depending on which figure the lender means.
Note also that the largest published bank bridging policy read for this guide does not use the phrase peak debt at all: it says bridging debt, and calls what you are left holding afterwards the end debt. Two lenders can describe the same structure in words that do not overlap, which is worth remembering before you assume 2 term sheets disagree.
| What the percentage is measured on | What that means for the loan you actually get | What to ask the lender |
|---|---|---|
| Peak debt | Both loans added together at their highest point. The tightest of the 4, and the smallest loan from the same percentage | What is inside peak debt: the new loan, the existing loan, and the interest budget as well? |
| Combined value of both properties | The 2 property values added together, which flatters the ratio, particularly when the property you are keeping is the more valuable one | Which valuations are used, and who orders them? |
| The security property alone | One property only. The same percentage produces a very different dollar figure depending on which property that is | Which property is the security, and is the second one taken as well? |
| The bridged debt across both securities | The bridging portion measured across both properties. More common in the private business purpose market | Is the end debt inside or outside this ratio? |
| Not published at all | A percentage is advertised and the basis is not stated anywhere on the lender's page | What is the percentage calculated on? Get the answer in writing before you pay for a valuation |
Sources: peak debt basis published by MA Money bridging page, Well Money bridging page, Brighten bridging page and Assetline Capital bridging page; combined value basis by La Trobe bridging page; security property basis by ORDE bridging page on an uncontracted sale; basis not stated on the Bridgit rates page and loans.com.au bridging page pages; all read 15 September 2026.
One more gap worth knowing. None of the 11 published a loan to value ratio calculated net of capitalised interest and fees, which is the figure that actually determines what you will owe at the end of the term. If interest is being capitalised, ask for the ratio both ways.
What does a bridging loan actually cost?
A bridging loan costs a rate plus a fee stack plus an interest treatment, and the three move independently, so the answer is more than the rate: on a short facility often considerably more, because the establishment fee, the valuation and both sets of legal costs all land inside a few months rather than being spread across a mortgage term. Every line is decoded, with dates, in bridging loan rates, fees and the term sheet. The honest way to compare 2 offers is to price the whole facility over the term you actually expect, then price it again over a longer one.
No interest rate band appears anywhere on this page, and that deserves an accurate reason rather than a convenient one. It is not that nobody publishes a number. Licensed non-bank lenders publish rates on their own product pages, and indicative bands for the private lane are published too, though generally by brokers and intermediaries rather than by the funders themselves, as quarterly reviewed market ranges rather than product terms. A range assembled that way is a reasonable sense of the market and a poor basis for a decision, so this page sets out the cost lines to ask about and sends you to a term sheet for the numbers.
| Cost | Who sets it | What to ask before you compare |
|---|---|---|
| Interest | The lender | Quoted per month or per annum, and charged on peak debt or only on the balance drawn? |
| Establishment or line fee | The lender | A percentage of what: the approved facility, or the amount actually drawn? Is it capitalised or payable in cash? |
| Valuation | The lender, through its panel valuer, usually at your cost | One property or both, and is a desktop or short form report acceptable? |
| Lender's legal costs | The lender's solicitor | Are they capped, and are they payable if the loan does not proceed? |
| Your own legal and conveyancing costs | Your solicitor or conveyancer | Does the scope include reading the loan and mortgage documents, not just the purchase? |
| Lenders mortgage insurance | The insurer, through the lender | Does it apply, and is it assessed on peak debt or on end debt? |
| Registration and discharge | The land registry and the lodging operator | On one property or both, and what is payable again when the bridge is discharged? |
| Extension or rollover fee | The lender | What happens if the sale is late, and what does an extension cost? |
Why is a bridging rate quoted per month by some lenders and per year by others?
Because the convention follows the length of the facility rather than the lender, and the 2 figures are not comparable until you convert them. Longer facilities, including bank bridging and most licensed non-bank bridging, are quoted per annum. Short facilities in the private lane, alongside caveat loans and second mortgages, are commonly quoted per month, because over a few months a monthly figure is easier for a borrower to picture.
The trap is that a monthly figure looks far smaller than the annual figure it implies, and the 2 conventions often appear in the same conversation. Convert both quotes to the same basis before you compare them. Then ask the question that matters more than the rate on a short bridge: whether the figure quoted sits before or after the establishment fee. On a facility running a handful of months, the establishment fee is frequently the larger of the 2 numbers, and a lower rate attached to a higher fee is not the cheaper loan.
Which lenders still write bridging loans in Australia?
Licensed non-bank lenders write most of the bridging that a borrower outside a bank's narrow shape can actually get, private funders write the business purpose files on the exit rather than on income, and the major banks still write consumer bridging on a 12 month shape for the borrower who fits it. The first two lanes are this page's subject; the bank lane is the comparison. If a bank has already said no, what to do after a bridging loan is declined runs the next steps, and if the problem is self-employed income evidence, buying before selling when self-employed is the page.
The unserved half is the business purpose and private market, where "non-bank" is used as a marketing word rather than a regulatory one. It is worth separating 2 very different things. A licensed non-bank lender holds its own Australian Credit Licence and writes consumer or dual purpose bridging under it, with published product terms, a target market determination and an external dispute resolution obligation. A private funder writing only business purpose loans on a section 13 declaration may hold no credit licence at all, because the Code does not reach the contracts it writes. Both get called non-bank. They are not the same counterparty.
| Type of lender | Term band | Interest treatment | Minimum size | Doc type |
|---|---|---|---|---|
| Licensed non-bank, full doc | Commonly 6 to 24 months | Interest budget retained or capitalised, commonly no monthly repayment | Published minimums from roughly $100,000 to $300,000 | Full doc |
| Licensed non-bank, alt doc | Commonly 6 to 12 months | Interest budget retained or capitalised, commonly no monthly repayment | Published minimums broadly in the same range | Alt doc or lite doc, and several publish no income documents where there is no end debt |
| Private funder, business purpose | Published ranges run from about 1 month out to about 36 months | Capitalised or prepaid, assessed on the exit rather than on income | Published minimums sit below the non-bank floors and vary by funder; the rest is quoted per file | Minimal documentation, exit evidence led |
| Bank, consumer | Up to 12 months, with no extension published | Either interest only payments on the total debt at the standard variable rate, or interest capitalised, depending on the bank; one major steps its rate up by 1.00 per cent after month 3 | Not published | Full doc |
Sources: non-bank rows from Bridgit rates page, La Trobe bridging page, MA Money bridging page, ORDE bridging page, Brighten bridging page, Well Money bridging page and loans.com.au bridging page; private rows from Assetline Capital bridging page and Funding.com.au bridging page; bank row from Commonwealth Bank bridging page, ANZ bridging page, Westpac bridging page and St.George relocation loan page, all read 15 September 2026. Lenders are named here because a source cell is the one place a lender may be named; the table carries bands, not any lender's figure.
Two honest limits on that table. It is drawn from the lender pages linked beneath it, read 15 September 2026, and several of those pages carry no effective date at all, which is its own warning about how current any published band really is. What every type of lender has in common is that these are short term loans priced on time, so a month of term you do not need is one of the more expensive things on a term sheet.
Why do banks decline bridging loans?
A bank usually declines a bridging loan for one of 4 reasons, and none of them is a judgement about you: the servicing test is applied to the total debt rather than to the bridge, the term is capped at 12 months, the product is restricted by customer eligibility, or the lender has no bridging product at all. A bank bridging product is written around one narrow shape of transaction, and most declines are simply files that sit outside it.
The servicing test is the one that catches self-employed borrowers. A major bank's own published broker policy asks you to show capacity to make interest only payments on the total debt during the bridging period, not on the bridge alone. A borrower whose most recent tax return understates current trading fails that test on paper while being perfectly capable of carrying the loan for the 4 months it will actually run.
The clock is the second. The term is capped at 12 months and the facility may be treated as in default if the outgoing property has not sold by then, which lands hardest on exactly the assets that take longest to sell. The third is eligibility: the same bank's broker facing page says bridging is available only to its existing customers, while its own customer facing page opens the product to new customers who will carry a minimum ongoing debt afterwards. Two pages published by the same institution, giving two different answers, which is the whole argument for reading a lender's own document rather than a summary of it. The fourth is simply that several lenders have no bridging product at all, so the decline is a product gap rather than a credit judgement. If that is where your file landed, why banks decline self-employed borrowers covers the pattern in detail.
Do you need a signed contract of sale before you apply?
No. A signed contract of sale on the property you are selling is not required at the time of application, which the same major bank states on both of its own published pages, and the licensed non-bank lenders read for this guide do not require one either. This is the most common wrong belief borrowers arrive with, and it costs people weeks while they wait for something nobody asked for.
What changes without a contract is the shape of the loan rather than your eligibility. A bridge with no contracted sale behind it is an open bridge, and it is termed and priced differently from a closed one. In place of the contract, a lender will want the listing, the agent's appraisal and the evidence sitting behind the asking price. That distinction is set out under open or closed bridging below, and it is worth reading before you accept any quote.
What a major bank publishes about its own bridging product
- 12 monthsThe maximum bridging term, running from the funding date. The loan may be treated as being in default if the existing property has not sold within that period. Commonwealth Bank bridging loan page and its broker product page, undated, read 15 September 2026.
- 80%The maximum loan to value ratio on a bridging loan, including lenders mortgage insurance where it applies. Commonwealth Bank bridging loan page and its broker product page, undated, read 15 September 2026.
- Total debtServicing is assessed on your capacity to make interest only payments on the total debt during the bridging period, not on the bridging portion alone. Commonwealth Bank bridging loan page and its broker product page, undated, read 15 September 2026.
Published bank policy as read on 14 September 2026, shown here as the comparison point for the non-bank and private lanes. Policy varies between lenders and changes without notice, and this is not a statement of what any lender will approve for you. General information only. Lender figures are published product terms read at source on the date shown, subject to change without notice and to credit assessment; they are not offers.
What does a non-bank or private lender need from you?
A licensed non-bank builds its decision around you and your end position. A private funder builds it around the security and the exit. That is the whole difference, and the 2 lists below are deliberately mirrored so you can see where your file is strong and where it will stall. The exit evidence a private funder will actually accept is set out in the private bridging guide.
What a licensed non-bank needs
- A signed contract or, where none exists yet, evidence the outgoing property is listed and being marketed
- Valuations on both properties, ordered by the lender rather than supplied by you
- Income evidence by document type, which is where the variance lives: full doc, alt doc or lite doc, and in several cases no income documents at all where there is no end debt
- Australian Business Number age and trading history, which is what turns a strong deal into a declined one for a recently restructured entity
- A serviceable end debt, because that is the loan you are still holding after the bridge closes
What a private funder assesses instead
- Security quality and marketability, including location, title and how quickly the asset would sell if it had to
- The loan to value ratio at peak across both securities, which is a tighter number than the headline percentage suggests
- The exit that repays the loan, and the evidence sitting behind it rather than the intention
- Whether the purpose is genuinely a business purpose, tested rather than assumed
- Clean title work and the consent of any prior mortgagee, which is often the real timing constraint
A private funder does not assess servicing in the ordinary sense, because there is nothing to service month to month. That is a structural feature of an exit based loan, not a relaxed standard, and it shifts the entire weight of the decision onto whether the exit is real. If your income evidence is the constraint rather than your equity, the document types that actually work for a self-employed borrower are set out in buying before selling when you are self-employed.
Open or closed bridging: which one are you asking for?
A closed bridge has a contracted exit, normally an exchanged contract of sale with a settlement date already fixed. An open bridge does not: the outgoing property may be listed, or not yet listed, and the repayment date is an expectation rather than a date in a contract. Every lender reads that difference before it reads anything else about you.
It matters because it drives 3 things at once: the term a lender will write, the size of the interest budget it sets aside, and the margin it charges for carrying an undated exit. A closed bridge is the cheaper and shorter of the 2 for the same security. The practical problem is that most Australian lender pages quote a single set of terms without saying which of the 2 the quote assumes, so 2 offers that look identical can be pricing completely different risks.
If you are given a rate or a term, ask which one it is based on, and ask what changes if your sale does not proceed. Where the answer is that you have no contract yet and the purchase cannot wait, that is the ordinary open bridge case rather than a problem, and it is the reason a documented exit strategy does more work on this file type than any other document you will provide.
What changes if you are bidding at auction?
Your finance has to be unconditional before you raise your hand, because an auction contract is normally not subject to finance and the deposit falls due on the day. That single difference reverses the usual order of work: instead of finding a property and then arranging finance, you arrange the facility, have the valuation done on the property you intend to bid on, and go to the auction knowing your limit.
Three things follow. Get the lender's formal approval rather than an indicative one, because an indicative approval is not a commitment and an auction contract gives you nothing to fall back on. Have the valuation on the target property completed before auction day where the lender will allow it, since a valuation that comes in under your winning bid after the fall of the hammer is your problem, not the vendor's. And confirm how the deposit itself is being funded, because a bridging facility usually settles at completion rather than on auction day, which is a different timing question again.
Auction rules, including whether any cooling off right exists and what happens if a property is passed in, are set by the law of the state the property is in and they differ. Take that question to your own solicitor or conveyancer before you bid rather than after, and where the deposit is the constraint rather than the purchase, a caveat loan is sometimes the faster instrument.
What do you need to have ready before you approach a lender?
Six things, and having them on hand is the biggest single difference between a bridge that settles in the time you have and one that does not. None of them requires a lender's involvement, so all 6 can be gathered before you speak to anyone.
- A current title search on both properties. Confirm who the registered owner actually is on each, because on a company or trust owned property that is the party which has to grant the mortgage, and it is not always the person making the enquiry.
- The contract on the property you are buying, and the evidence on the one you are selling. That means the contract of sale if you have one, and if you do not, the listing, the agent's appraisal and the reasoning behind the asking price.
- The payout figure and the lender on every mortgage already registered over either property. A payout figure is not the same as your statement balance, and the difference can be material on a short loan.
- The answer to whether a prior mortgagee's consent is needed, and whether anyone has asked for it. This is the step raised latest and the one that most often moves a settlement date, so raise it first.
- The exit, in writing. A contract, a refinance approval in principle, or the listing and the evidence behind the price. An intention is not an exit, and a lender will tell you so at the point it costs you time.
- For a business purpose file, what the money is actually for, in plain words. The lender has to make its own inquiries into purpose, so a declaration alone does not settle it, and a vague answer at this stage becomes a problem later.
From our broking, indicative
What lenders actually look at first on a bridging file is rarely the number the borrower has been worrying about. These are the reasons files stall in practice, described qualitatively because the outcomes vary too much by lender and by circumstance for any figure to be meaningful.
- The exit is an intention rather than an evidenced plan, with no listing, no agent appraisal and no refinance approval behind it
- The outgoing property is the kind of asset that takes a long time to sell, and the requested term is set from the borrower's hope rather than from the market
- The purpose has been described as a business purpose because someone said it would be easier, when the money is clearly going somewhere else
- Prior mortgagee consent has not been raised with anyone until the week of settlement
- The end debt would not be serviceable on any measure, which makes the bridge a way of postponing a problem rather than solving one
Indicative only, based on deals we have placed, not a quote or an offer. Actual outcomes depend on lender policy and your circumstances at the time of application. Not financial advice.
Do you make repayments on a bridging loan?
On most non-bank bridging loans you make no monthly repayment, because the interest is capitalised, prepaid or drawn from a retained interest budget. On most bank bridging you do pay, and the payment is interest only on the total debt rather than on the bridging portion alone. That single difference is the clearest practical split between the two, and it follows from 4 distinct interest treatments that get discussed as though they were one.
The 2 most often confused are prepaid interest and a retained interest budget. Under a prepaid structure the interest is calculated up front and included in the total loan amount. Under an interest budget the lender sets aside an allowance inside the approved facility and draws the interest from it as the loan runs. Both mean no monthly repayment, and they behave differently when you repay early. Interest that capitalises compounds, which is the mechanism worth understanding before you compare 2 facilities on their headline rate; capitalised interest covers how that works and what it costs.
There is a live disagreement on the prepaid question that is worth settling before you sign, because the 2 answers are different money. Industry summaries commonly say unused prepaid interest is refunded to you. At least one lender's own published answers say something else: the interest is recalculated on the actual term and the payout figure is reduced accordingly. In that version you never receive money back, you simply owe less at settlement, and if you are carrying an end debt afterwards you cannot spend the difference. Ask for the early repayment wording in the loan document rather than relying on a summary of it, and note that on the lenders who run an interest budget rather than a prepaid structure, nothing published answers this at all.
| Treatment | What you pay monthly | What happens to the balance | What it does to your payout |
|---|---|---|---|
| Capitalised | Nothing | Interest is added to the loan and then attracts interest itself, so the balance grows faster the longer the bridge runs | The payout figure at sale is higher than the amount you drew, by more than simple interest would suggest |
| Prepaid | Nothing | Interest is calculated up front for the expected term and included in the amount advanced | On early repayment it may be recalculated on the actual term and reduce the payout, which is not the same as a refund to you |
| Retained interest budget | Nothing | An allowance inside the approved facility is drawn down to meet interest as it falls due | Only the portion actually drawn forms part of the payout, and what happens to an unused budget is usually not published |
| Interest only | Interest on the debt, and on bank bridging generally on the total debt rather than the bridge alone | The balance stays flat, because interest is paid as it accrues rather than added | The payout is the amount drawn, and the cost has already left your cash flow month by month |
How long does a bridging loan take, from application to the end of the term?
Two different clocks get called "how long", and running them together is why the published answers disagree with each other. Arranging a bridging loan is measured in days to weeks and is decided by documents and consents rather than by credit. The term of the loan is measured in months, capped at 12 months on bank bridging, with licensed non-bank lenders publishing terms of up to 24 months and some private business purpose facilities publishing longer ranges again.
How fast can a bridging loan actually settle?
Faster than a bank refinance, and slower than the advertised numbers imply, because the turnaround figures published in this market describe an indicative approval or a term sheet rather than money in a trust account. No honest single number can be given for the whole path, because most of it is not controlled by the lender quoting it.
What sits between a term sheet and settlement is a valuation, formal credit approval on the exit, the lender's loan and mortgage documents, your own signing, and, where a mortgage is already registered over either property, the existing lender's consent. That last step is the one raised latest and the one that most often turns an approval measured in days into a settlement measured in weeks. It is a contractual step between 2 lenders rather than anything the land registry asks for, and what title control and consent actually involve works through the same mechanics on a second mortgage, where they are identical.
| Step | Who controls it | What typically holds it up |
|---|---|---|
| Indicative terms or term sheet | The lender, working from the scenario you give it | An incomplete scenario. A missing existing mortgage, or a company or trust borrower mentioned late, changes the answer |
| Valuation | The lender, through its own panel valuer | Access to the property, and valuer availability in regional areas or on specialised security |
| Formal credit approval | The lender's credit team | The exit evidence rather than your income. A listing with no appraisal behind it is the common stall |
| Loan and mortgage documents | The lender's solicitor | Borrowing entity details arriving late, particularly a trust deed nobody has read or a company with a missing signatory |
| Existing mortgagee's consent or priority arrangement | Your current lender, not the incoming one | Nobody asking for it until settlement week. It is a contractual step between 2 lenders and it runs on the slower one's timetable |
| Signing and settlement | You, your solicitor and the incoming lender | Signatories in different places, and electronic settlement bookings that have to fit the other side of the transaction |
If timing is critical, ask for the file to be split into those named dependencies rather than quoted as one number. That shows you which party is actually holding the transaction up, and it is the only way to tell a lender that is genuinely fast from one that is fast at the first step only.
What if the sale comes in lower, or later, than you expect?
Both land on the same number from different directions, and that number is your end debt. A lower sale price raises end debt dollar for dollar. A later sale adds interest to a balance that is usually compounding, and on a longer term it can also push you past the facility's expiry. Model both before you sign rather than hoping neither happens.
Take the illustrative deal above. End debt at the expected sale price of $900,000 was $627,000, or 52.3% against the property being kept. Sell instead at $840,000 and net proceeds fall to $818,000, so end debt rises to $687,000 and the ratio moves to 57.3%. That is a $60,000 swing on the loan you keep, produced by a 6.7% movement in a sale price you do not control, before any additional interest for the extra months on market.
The practical test is simple. Work out whether you could service the end debt at the lower price, on a longer term, at the rate you have been quoted. If the answer is no, the bridge is deferring a problem rather than solving one, and that is worth knowing before the deposit is committed rather than after.
How long can the term be, and what happens when it ends?
Bank bridging is generally capped at 12 months, while non-bank terms of up to 24 months are published and one private term sheet runs longer again. What happens at expiry depends far more on which lender wrote the loan than on the length: a bank facility may be treated as in default, while some non-bank facilities convert to a longer term loan over any residual debt instead of demanding the whole balance. A private facility turns on the enforcement terms in its own documents, which is a reason to read them before you sign rather than after. What happens on the maturity date when the property has not sold, in order, is the bridging loan expired and not sold guide's question.
If the pressure is coming from the other side of the transaction rather than from the bridge itself, the 2 documents that actually set your deadline are worth reading first: what a notice to complete obliges you to do, and how penalty interest on a late settlement is calculated.
How do you check a short term property lender before you sign?
Check what the lender is licensed to do, and then check what that licence does not cover, because on a business purpose bridge the answer is often "nothing here". The generic question of how to check a licence is answered thoroughly by the regulator itself and there is no point restating it. The part nobody joins up is what a business purpose only lender is not required to hold, and what that removes for you.
- Search the public registers first. The corporate regulator's professional registers search covers credit licensees and credit representatives as separate searchable registers, along with financial services licensees and authorised representatives. If a funder tells you it is licensed, that is where you confirm it rather than taking the claim from a website footer.
- Understand what a business purpose only lender may not need. Because the Code reaches consumer credit contracts, a funder writing exclusively business purpose loans may hold no Australian Credit Licence at all. That is lawful, and it is not a sign of a bad lender. It does mean the obligations that ride on a credit licence do not attach to that relationship, which is a different conversation, set out below.
- Ask the dispute resolution question directly, in writing. Not whether the funder is regulated, which invites a vague answer, but whether it is a member of the Australian Financial Complaints Authority. A commercial only lender may have joined voluntarily, and knowing which is the single most useful thing you can establish before you sign.
- Read the enforcement record rather than the marketing. In April 2025 the Federal Court found a business lender and a loan introducer had engaged in unlicensed credit activity on loans made to 2 consumers, and in December 2025 they were penalised a combined $515,000. The finding that matters to you is not the amount. It is that a signed declaration did not do the job the lender expected it to do.
- Do not rely on the register of carried over instrument lenders as a watchlist. It exists for pre July 2010 legacy contracts and says nothing about whether a modern unlicensed lender is one you should deal with.
What protection do you actually have on a loan outside the Code?
Less than most borrowers assume, and the regulator says so in plain words rather than leaving you to infer it. In Information Sheet 207, reissued in April 2024, ASIC sets out that the law gives the lowest level of protection to commercial loans, including loans to small businesses, and that lenders providing loans to consumers must hold a credit licence and must be a member of the Australian Financial Complaints Authority, while lenders providing only commercial loans are required to do neither.
That obligation is real and enforced wherever it applies. Between 25 July and 29 August 2025 the regulator cancelled 3 credit licences and suspended a fourth for failing to hold that membership. Off licence, the obligation does not exist at all. The same rule that bites hard on one side of the line is simply absent on the other, and that is the practical meaning of the warning printed on the declaration you sign.
Three things follow, and they are worth knowing before rather than after.
- The dispute scheme may still be open to you, but only by the lender's choice. The scheme can consider complaints from small businesses about commercial lending, and its rules define a small business as a primary producer or other business with fewer than 100 employees. It can only consider a complaint about a firm that is a member, so a commercial only lender is reachable only if it joined voluntarily. ASIC's advice where it has not is to seek private legal advice.
- General law protections survive, with a high bar. The Australian Securities and Investments Commission Act prohibits unconscionable conduct, misleading or deceptive conduct, and unfair contract terms in standard form small business contracts. ASIC's own note is that courts set a high bar in commercial lending, read the transaction as a business one, and generally treat commercial parties as able to look after their own interests, so conduct that feels unfair may not meet the legal test.
- The regulator is not your remedy. ASIC states that the low level of legal protection on commercial loans limits its ability to act against lenders, and that its role does not extend to acting on behalf of individuals or businesses in private disputes except in the limited cases where there is a broader public interest.
None of that makes a business purpose bridge the wrong instrument. It does mean the discipline that protects you on one is largely your own: a documented exit strategy, loan terms you have read in full rather than in summary, and your own solicitor across the documents before you sign. This page describes the framework in general terms only and is not legal advice.
For perspective on the size of the market you are dealing with, the Reserve Bank's Financial Stability Review of March 2026 says financial stability risks from non-bank lenders are limited by their relatively small size, that credit extended by non-banks has been growing at a faster pace than credit extended by banks, and that the sector plays an important part in providing finance in areas where banks tend not to compete. The figure of 6% of financial system assets that commonly circulates alongside that point comes from the April 2025 edition. Read together they cut both ways: this is a real and supervised part of the market rather than a fringe, and it is also small enough that the quality of the individual counterparty matters more than the category does.
Do you actually need a bridging loan?
Often you do not, and it is worth testing before you price one. A subject to sale clause, a longer or deferred settlement, or a simultaneous settlement all solve the same timing problem without adding a facility, and a vendor under no pressure will sometimes agree to one of them for nothing. A bridge earns its place when the purchase cannot wait, when the outgoing asset will take real time to sell, or when a deadline is already running against you; where the constraint is genuinely speed rather than sequencing, fast settlement finance is usually the more honest comparison. The four alternatives, priced against each other, are in do you actually need a bridging loan.
If you do need one, start with the instrument rather than the lender. A business purpose bridge taken on the strength of equity and a defined exit belongs in private lending. Where the timing is measured in days and the security is clean, a caveat loan may fit the gap better. Where there is room behind an existing first mortgage and the term is longer, a second mortgage is usually the cheaper instrument for the same job.
What did this look like on a real file?
On a file this desk worked in 2026, a self-employed owner wanted to buy the next home before the current one sold. The structure that priced best was not a bridge at all: a cash out refinance of the current home at 80 per cent on an accountant's letter, plus a separate purchase loan, with the keep or sell decision made by a 10 day sale test with the agent rather than by the lender. On the residential files this desk sees, that comparison is the more common answer, and it is worth asking for before you price a bridge.
Indicative, anonymised, based on a file this desk worked in 2026. Not a quote, not an offer, and not a limit you will be given. Actual outcomes depend on lender policy, the valuation and your circumstances at the time of application.
We are a brokerage, not a lender, and we do not place every funder in the market. What we can do is work out which of the 3 categories your file sits in, tell you plainly where it will and will not be placeable, and point you at the right counterparty even where that is not one of ours. The rest of the property lending work sits in the property lending hub, and if you would rather start with your own numbers you can check eligibility first.
Work out peak debt and end debt before you look at a rate, because peak debt decides whether anyone will approve the facility and end debt is the loan you are still holding afterwards. Then work out who is lending and why it matters: a bank will cap the term at 12 months and assess you on the total debt, a licensed non-bank will usually take the monthly repayment away and put the weight on the end debt, and a private funder will not assess servicing at all, on a declaration that only works if it is true and if the lender tested it. The number to interrogate is not the loan to value ratio percentage, it is what that percentage is being measured against, and whether the rate beside it is quoted per month or per year.
Key takeaway: model a lower sale price and a longer sale period before you sign, because both land on the same number and neither is in your control.Frequently Asked Questions
Peak debt is the loan you need on the new property, including purchase costs and less any cash you contribute, added to the mortgage still owing on the property you are selling. End debt is peak debt less the net proceeds of that sale. Work both out before you look at a rate: peak debt decides whether a lender will approve the facility, end debt is the loan you keep. Model a lower price and a longer sale as well; the worked example shows how the balance moves.
Some bridging finance is regulated and some is not, and the test is the borrower and the purpose rather than the product name. A bridge taken by an individual wholly or predominantly for personal, domestic or household purposes, or for residential investment property, is regulated by the National Credit Code. A bridge taken wholly or predominantly for business purposes, or for investment other than residential property, sits outside the Code on a declaration. The instrument chooser sets out how that affects which product fits.
Faster than a bank refinance, and slower than the advertised numbers imply, because published turnaround claims describe an indicative approval or a term sheet rather than money in a trust account. Between the two sit a valuation, formal credit approval on the exit, loan and mortgage documents, your signing and, where a mortgage is already registered over either property, the existing lender's consent. Ask for the file to be split into named dependencies rather than a single number; the settlement side is in fast settlement finance.
Because the convention follows the length of the facility. Bank bridging and most licensed non-bank bridging are quoted per annum. Short private facilities, alongside caveat loans and second mortgages, are commonly quoted per month, because over a few months a monthly figure is easier to picture and looks far smaller than the annual figure it implies. Convert both to the same basis before you compare, and ask whether the rate sits before or after the establishment fee; the term sheet decoded does the conversion.
A closed bridge has a contracted exit, normally an exchanged contract of sale with a settlement date. An open bridge does not, and its repayment date is an expectation rather than a date in a contract. That changes the term a lender will write, the interest budget it sets aside and the margin it charges, and most lender pages quote one price without saying which they assume. Ask which one your quote is based on; closed or open bridging loan sets out what a signed contract changes.
A declaration is ineffective where the credit provider knew or had reason to believe, or would have known had it made reasonable inquiries, that the credit was in fact going to a purpose the Code covers: that is section 13(3), and section 13(4) then treats the contract as one the Code applies to. It is also ineffective if it is not substantially in the form the regulations prescribe. If you are unsure which side of the line your loan falls, ask your solicitor, and see private bridging loans for business.
Often yes, because the most common bank decline on a bridge is a servicing test applied to the total debt rather than a judgement about the deal, and the non-bank and private lanes do not apply that test the same way. What changes is what you must evidence instead: the security, the loan to value ratio at peak, and a real exit. If the decline was on the business side rather than the property side, what to do after a business loan is declined works through the sequence.
No. A signed contract of sale on the property you are selling is not required at application: the major bank whose policy is set out on this page states that on its own page, and the licensed non-bank lenders read for this guide do not require one either. What changes without a contract is the shape of the loan, because a bridge with no contracted sale is an open bridge, termed and priced differently. What the lender wants instead is in closed or open bridging loan.
On most non-bank bridging you make no monthly repayment, because the interest is capitalised, prepaid, or drawn from a retained interest budget inside the facility. On most bank bridging you do pay, and the payment is interest only on the total debt rather than on the bridging portion alone. The four treatments cost different amounts and behave differently if you repay early, and capitalised interest explains why the compounding version is the one to model carefully.
Bank bridging is generally capped at 12 months from funding. Licensed non-bank lenders publish terms of up to 24 months, and some private business purpose facilities publish longer ranges again. Note that the Code's own definition of a bridging finance contract requires a term of 2 years or less, so a longer facility is something else by definition. Where the term is being set by a deadline rather than by a sale, read what a notice to complete requires before you fix on a number.
Selling for less raises your end debt dollar for dollar, and selling late adds interest to a balance that is usually compounding. What happens at expiry depends on the lender: a bank facility may be treated as in default after its 12 month term, some non-bank facilities convert to a longer loan over the residual debt, and a private facility turns on its own enforcement terms. The expiry sequence is in bridging loan expired and not sold and the shortfall side in sold early or sold for less.
Not if it writes commercial loans only. ASIC states in Information Sheet 207 that lenders providing loans to consumers must hold an Australian Credit Licence and be a member of the Australian Financial Complaints Authority, while lenders providing only commercial loans are required to do neither. Where the obligation applies it is enforced: ASIC cancelled 3 credit licences and suspended a fourth in mid 2025 for failing to hold membership. How to check a private funder before you sign is in the private bridging guide.
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