Bridging Loan Calculator

How bridging finance actually works

When you buy before you sell, your lender doesn't give you two separate loans and hope for the best. It funds the whole position — your existing loan plus everything needed to settle the new place — and treats it as one debt secured against both properties. That combined figure is your peak debt.

When your current home sells, the net proceeds come straight off that balance. What's left is your end debt, and it's the number that matters most, because that's the mortgage you'll be paying for the next twenty or thirty years. A bridging loan that looks frightening at peak can leave a very comfortable end debt — and the reverse is also true.

Peak debt

Your current loan balance, plus the purchase price of the new home, plus stamp duty and costs, less any cash you put in. It's measured against the combined value of both properties, which is why the loan-to-value ratio during the bridging period is usually lower than people expect.

End debt

Peak debt less the money you actually receive from the sale — after the agent's commission and selling costs, not the headline sale price. That gap surprises people, so the calculator above deducts it for you.

What it costs

Interest is charged on the full balance for as long as you hold both properties. Several major lenders require you to pay that interest monthly during the bridging period, and will want to see you can afford it — either from income or from savings set aside for the purpose. Others add the interest to the loan instead, which costs more overall because you end up paying interest on interest. Which approach applies depends entirely on the lender, and it's one of the first things worth pinning down.

The things that genuinely go wrong

• The sale price assumption. Almost every bridging deal that turns painful does so because the existing home sold for less than expected, or took longer than expected. Model it low. If the numbers still work at 10% under, you have a real plan rather than a hope.
• Running past the term. Bridging periods are commonly capped at around 12 months, and lenders take the deadline seriously. If the property hasn't sold and settled in time, some lenders can treat the loan as being in default, change the rate, or step in to help sell the property. Ask what your lender does before you sign, not after.
• Assuming a nil end debt is fine. If the sale will clear the debt entirely and leave you owning the new home outright, that sounds ideal — but some lenders require a minimum ongoing loan to write the bridge at all, particularly if you're new to that bank. It's a common reason a downsizer's application doesn't fit where they expected.
• Forgetting the deposit is due before any of this. Bridging funds the settlement, not the 10% you hand over on the day you sign the contract.

When bridging isn't the answer

It isn't always. If your current home is genuinely close to sold, aligning the two settlement dates can achieve the same outcome for nothing. If you're buying at auction, a longer settlement is sometimes negotiable and costs less than a bridge. Where a deposit is the only real hurdle, a deposit bond may do the job. And if the sums only work on an optimistic sale price, the honest answer is usually to sell first and rent for a few months — less exciting, far less risk.

Working out which of those fits your situation is the actual job, and it's the conversation worth having before you fall in love with a property.