Bridging loans are not structured the same way by all lenders. Features, repayment options and eligibility criteria can vary significantly, which is why understanding how different lenders approach bridging finance is important.
At Ironbark, we provide credit assistance to help you understand how bridging loans work and how different lender structures may apply to your circumstances.
How bridging loans are typically structured
While structures differ between lenders, a bridging loan generally involves:
- A bridging period, where you temporarily hold both properties
- A peak debt, which reflects the highest loan balance during the transition
- An end debt, which remains after your existing property is sold
Some lenders allow interest to be capitalised during the bridging period, while others require interest-only repayments. Timeframes, repayment expectations and end-debt requirements vary depending on the lender and your situation.
Key differences between lenders
Bridging loans can differ significantly between lenders, including:
- Whether interest can be capitalised or must be paid during the bridging period
- How long the bridging period can last
- How borrowing capacity is assessed during the transition
- Whether repayments are required on the end loan during the bridging period
- The availability of features such as offset or redraw
- How many properties can be sold as part of the bridge
These differences can have a meaningful impact on cash flow, flexibility and risk.
How we help
Our role is to provide credit assistance by:
- Explaining how bridging loans work and the risks involved
- Comparing bridging loan structures offered by different lenders
- Modelling lending scenarios based on your borrowing position
- Managing the application, approval and settlement process
- Supporting the transition from the bridging loan to an ongoing loan
Where appropriate, we work alongside your financial adviser to ensure the lending structure aligns with your broader financial plan.
Bridging loans are not suitable for every situation. We help you understand the lending implications clearly so you can make informed borrowing decisions.