Bridging finance lets you buy your next property before your current one sells.
You're on roster, you've found the right property, and the seller won't wait three months for your place to settle. A bridging loan covers the gap between buying and selling so you don't miss out or rush into a discounted sale. It's short term finance that sits alongside your existing mortgage until your current property sells and you can pay it out.
How Bridging Finance Actually Works
You borrow against the equity in your current property to fund the deposit and costs for the new one. The lender takes security over both properties. Your existing mortgage stays in place, the bridging loan sits on top, and you pay interest on the bridging amount until your sale settles. Once your property sells, the bridging loan is repaid from the proceeds and you're left with a standard mortgage on the new property.
Most bridging loans are written for six or twelve months. You don't make monthly repayments during the bridging period. The interest is capitalised, which means it's added to the loan balance and paid when the loan is discharged. That keeps your cash flow intact while you're holding two properties, which matters when you're managing fly-in fly-out rosters and don't want repayment stress between swings.
What It Costs and How Lenders Calculate It
Bridging loan interest rates sit above standard variable rates. Expect to pay between 0.5% and 1.5% more than a comparable variable home loan. On a bridging loan amount of $150,000 over six months, that might work out to around $5,000 to $6,000 in capitalised interest, depending on the lender and your loan to value ratio.
There are also upfront costs. Application fees, valuation fees for both properties, and sometimes a higher establishment fee than you'd see on a standard mortgage. Lenders will want valuations on both the property you're selling and the one you're buying, so factor in $500 to $1,000 for that alone. Some lenders also charge a bridging loan-specific fee, which can sit anywhere from $500 to $1,500.
The loan to value ratio matters. Most lenders will lend up to 80% across both properties without requiring lenders mortgage insurance. If you're pushing above that, you'll either need to find a lender who accepts higher LVRs for bridging loans for FIFO workers or pay LMI, which can add thousands to the cost depending on the shortfall.
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The Exit Strategy Lenders Want to See
Every bridging loan application requires a clear exit strategy. That's how you'll repay the bridging loan, and in most cases it's the sale of your current property. Lenders will want to see that your property is listed or about to be listed, that the asking price is realistic based on recent sales, and that there's enough equity after the sale to repay the bridging loan and leave you within a serviceable LVR on the new property.
Consider a mobile plant operator buying in a northern Perth suburb. They've exchanged contracts on a new place for settlement in 45 days and their current property is listed but hasn't sold yet. The lender approves a bridging loan for $180,000, covering the deposit and settlement costs on the new property. The bridging term is set at six months, but the property sells within 10 weeks. The bridging loan is repaid from the sale proceeds, and the operator refinances into a standard home loan for FIFO mobile plant operators on the new property without carrying over the capitalised interest beyond what accrued in those 10 weeks.
If your property doesn't sell within the bridging period, you'll need to either extend the bridging loan, which usually incurs additional fees and interest, or refinance the entire debt into a standard loan across both properties if you can service it. That's rare, but it's why lenders are cautious about approvals and why your exit strategy needs to be realistic from the start.
When Bridging Finance Makes Sense and When It Doesn't
Bridging finance works when the property market is moving, when you've got genuine equity in your current place, and when waiting to sell first means losing the property you actually want. It doesn't work if your sale timeline is uncertain, if your equity is thin, or if the cost of holding two properties for several months outweighs the benefit of moving now.
In a scenario where a FIFO worker has found a property closer to family in a regional area but their current metropolitan property is taking longer to sell, bridging finance can create more problems than it solves. If the sale drags past six months and the worker can't service both loans simultaneously, they're either forced to extend the bridging term at additional cost or sell under pressure at a lower price. That's the risk, and it's worth weighing that against whether renting short term or negotiating a longer settlement might be a better option.
Bridging finance also isn't a substitute for deposit savings. If you're relying on bridging finance because you don't have a deposit, the numbers won't stack up. Lenders calculate the bridging loan amount based on your equity in the existing property, not your ability to borrow more. If you're looking to buy with a low deposit, a low deposit loan for FIFO workers or a guarantor loan is a more suitable structure than a bridging loan.
How Approval Works for FIFO Borrowers
Lenders assess bridging loan applications the same way they assess any other home loan, with the added layer of checking the exit strategy. Your income, employment history, existing debts, and credit file all come into it. For FIFO workers, that means the lender will want to see your roster pattern, your base salary, and any allowances that can be included in serviceability.
Some lenders are more familiar with FIFO income structures than others. If you're working a two-week-on, one-week-off roster as a mobile plant operator and earning site allowances on top of your base, a lender experienced with FIFO applications will know how to assess that income correctly and won't discount it unnecessarily. That can be the difference between an approval and a decline when the numbers are tight.
The bridging loan approval usually happens at the same time as the approval for your new mortgage. You're not applying twice. The lender structures both loans together, takes security over both properties, and assesses whether you can service the new loan once the bridging component is repaid. Fast approval is possible if your financials are in order and both properties are straightforward to value, but expect the process to take at least a week or two depending on how quickly valuations come back.
What Happens During the Bridging Period
Once the bridging loan settles, you'll have access to the funds to complete the purchase of your new property. Your existing mortgage continues on your current property as usual, and you're not making separate repayments on the bridging loan. The interest accrues daily and is added to the loan balance.
You'll want your current property sold as quickly as possible to minimise the interest cost. That means pricing it right from the start, being flexible with inspection times even when you're on site, and staying in regular contact with your agent. Every extra month the property sits on the market is another month of capitalised interest and another month closer to the end of your bridging term.
If you're managing this process from a remote site, make sure your conveyancer or solicitor has clear instructions and authority to handle settlement tasks without needing you to be physically present. Most bridging loan settlements can be managed remotely, but it requires the right documentation in place before you head back on shift.
Alternatives Worth Considering
If bridging finance feels like too much risk or cost, there are other ways to move between properties without selling first. Negotiating a longer settlement period on your purchase can give you time to sell without needing bridging finance at all. Some sellers will accept 90 or 120 day settlements if it means securing the sale, particularly in slower markets.
Another option is a deposit bond, which lets you exchange contracts on the new property without paying a cash deposit upfront. The bond guarantees the deposit amount to the seller, and you pay it from the proceeds of your sale at settlement. It's not a loan, so there's no interest, but there is a fee, usually around 1% to 2% of the deposit amount. That can work out cheaper than bridging finance if your sale is only a few months away.
If you've got equity in your current property and your sale is imminent, some lenders will consider a temporary increase to your existing mortgage to cover the deposit on the new property, then reduce the loan again once your sale settles. That's not technically a bridging loan, but it achieves the same result without the separate loan structure or the higher interest rate. Not all lenders offer this, and it depends on your equity position and serviceability, but it's worth asking about if the timing is tight.
Call one of our team or book an appointment at a time that works for you. We'll work through the numbers, talk through your exit strategy, and make sure the structure fits your roster and your timeline without stretching the budget further than it needs to go.
Frequently Asked Questions
How long does a bridging loan last?
Most bridging loans are written for six or twelve months. The term is set based on how long you expect it to take to sell your current property. If your property doesn't sell within that period, you'll need to extend the loan or refinance into a standard mortgage structure.
What does bridging finance cost compared to a standard home loan?
Bridging loan interest rates sit between 0.5% and 1.5% above standard variable rates. You'll also pay application fees, valuation fees for both properties, and sometimes a bridging-specific establishment fee. The interest is capitalised, so you don't make monthly repayments during the bridging period.
Can I get bridging finance if I'm working FIFO?
Yes, but lenders will assess your income the same way they do for any home loan, including your roster pattern and allowances. Some lenders are more familiar with FIFO income structures than others, and that can affect your approval and the loan amount you're offered.
What happens if my property doesn't sell during the bridging period?
You'll need to either extend the bridging loan, which incurs additional fees and interest, or refinance the debt into a standard loan across both properties if you can service it. That's why lenders require a clear and realistic exit strategy before approving the loan.
Is bridging finance the only way to buy before I sell?
No. You can also negotiate a longer settlement period on your purchase, use a deposit bond to secure the contract without a cash deposit, or ask your lender about temporarily increasing your existing mortgage if your sale is imminent. Each option has different costs and timing considerations.
