Bridging finance lets you buy your next property before selling your current one by using the equity in your existing home as security for a short term loan.
As a registered nurse or midwife looking to upgrade, you face a timing problem that bridging finance is designed to solve. You find a property that suits your needs, but your current home hasn't sold yet. A bridging loan covers the gap between purchase and sale, typically for six to twelve months, so you can secure the new property without waiting for settlement on the old one. The loan amount is calculated based on the combined security of both properties, and once your existing property sells, the proceeds repay the bridging loan.
This approach removes the pressure to sell quickly or rent temporarily between properties, but it comes with higher costs and requires you to service two loans simultaneously until the sale completes.
How Bridging Finance Calculations Work for Two Properties
The lender assesses your bridging loan application based on peak debt, which is the total amount you'll owe across both properties before the sale settles. Your existing home provides security even though it's listed for sale, and the new property becomes additional security once you purchase it.
Consider a scenario where you own a property valued at $650,000 with a remaining mortgage of $320,000. You want to purchase a new home, and the lender will calculate the loan to value ratio across both properties during the bridging period. Your serviceability is assessed on the assumption that you're carrying debt on both properties, so your income needs to cover repayments on the old loan, the new loan, and the capitalised interest on the bridging component. Most lenders require you to demonstrate that you can service the combined debt without relying on rental income from either property. For nurses and midwives, stable PAYG income makes this serviceability assessment more straightforward than it is for self-employed borrowers, but shift penalties and overtime are not always included at full value depending on the lender.
The bridging loan term is typically six months, with the option to extend to twelve months if your property hasn't sold. Interest on the bridging portion is usually capitalised, meaning it's added to the loan balance rather than paid monthly, and this interest compounds over the bridging period. The total interest capitalisation can add several thousand dollars to your debt depending on the bridging loan amount and the variable interest rate applied by the lender.
The Costs and Fees You'll Pay During the Bridging Period
Bridging finance costs more than a standard home loan. Lenders charge a higher interest rate on the bridging component, application fees for both the bridging facility and the new loan, and valuation fees for both properties.
The bridging loan interest rate is typically higher than the standard variable interest rate on your new home loan. Some lenders apply a margin of 1 to 2 percent above their standard variable rate to the bridging portion. If the standard rate sits around current variable rates, the bridging component might attract a rate closer to 8 or 9 percent, though rates vary between lenders. Application fees can range from $600 to $1,200 depending on the lender, and you'll also pay for two property valuations. Settlement costs apply to the new purchase as usual, including conveyancing, title registration, and transfer fees. These fees are in addition to the interest capitalisation that accrues during the bridging period.
If your existing property doesn't sell within the initial bridging loan term, you'll need to apply for an extension. Some lenders charge an extension fee, and the capitalised interest continues to accrue on the outstanding balance. The longer the bridging period runs, the more expensive the total bridging finance costs become. In our experience, most bridging loans are structured with a clear exit strategy and a realistic sale timeline, but market conditions and property presentation can extend the period beyond initial expectations.
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Bridging Loan Approval and What Lenders Assess
Lenders assess bridging loan applications with more scrutiny than standard home loan applications because the risk profile is higher. They want to see that your existing property is genuinely saleable, that the asking price is realistic, and that you can service both loans if the sale takes longer than expected.
Your bridging finance application will require a valuation on both properties, a signed contract of sale for the new property, and evidence that your current home is listed for sale with a registered agent. The lender will review the agent's appraisal and marketing plan, and they'll often apply a discounted valuation to your existing property to account for the uncertainty of sale timing and market conditions. For example, if your property is valued at $650,000, the lender might only recognise $600,000 as security during the bridging period. This discount affects your loan to value ratio and may reduce the amount you can borrow or require you to contribute additional funds to keep the LVR within the lender's acceptable range.
Lenders will also assess whether your income is sufficient to meet repayments on the new loan and the existing loan simultaneously. This is where home loans for nurses can work in your favour, as registered nurses and midwives typically have stable, verifiable income that lenders view positively. However, even with strong income, the combined loan repayments during the bridging period can push your debt-to-income ratio higher than it would be with a single loan, so some lenders may decline or limit the bridging loan amount if serviceability is tight.
When Bridging Finance Makes Sense and When It Doesn't
Bridging finance is most useful when you need to act quickly on a property purchase and your existing home has strong equity and sale potential. It's less suitable if your current property is difficult to sell, if your financial position is stretched, or if you're buying in a market where you could negotiate a longer settlement period.
If you're a registered nurse relocating for a new role and you've found a property close to your new hospital, bridging finance might let you secure that property and move in without the disruption of temporary rental accommodation. In that scenario, the convenience and certainty can outweigh the additional cost, particularly if your existing property is in a high-demand area and likely to sell within a few months. On the other hand, if your current home is in a slower market or needs significant work before it will attract buyers, a bridging loan increases your risk. You'll be carrying two properties, paying interest on both, and potentially facing pressure to reduce your asking price if the bridging period is nearing its end.
An alternative to bridging finance is to negotiate a longer settlement period on your new purchase, giving you time to sell your existing property before the new purchase settles. Some sellers will agree to a 90 or 120-day settlement, particularly if they're also buying and need time to arrange their own finance. Another option is to arrange finance that allows you to port your existing loan to the new property, though this depends on your lender's policy and your loan structure. For nurses and midwives considering their next property move, speaking with a mortgage broker for nurses before you start looking can clarify whether bridging finance or another structure will suit your circumstances.
What Happens If Your Property Doesn't Sell
If your property doesn't sell within the bridging loan term, you'll need to either extend the bridging facility, refinance the debt into a longer-term structure, or sell the new property. Each option has financial and practical consequences.
Most lenders will allow one extension of the bridging loan term, usually for another six months, but this isn't automatic. The lender will reassess your situation, review the marketing of your existing property, and may require you to reduce the asking price or change agents as a condition of the extension. The capitalised interest continues to accrue during the extension period, increasing the total debt you'll need to repay when the property eventually sells. If the property still doesn't sell after the extension, the lender may require you to refinance both properties into a standard loan structure, which means you'll be carrying two properties long term and paying ongoing repayments on both. This can strain your budget and limit your borrowing capacity for other purposes.
In some cases, borrowers choose to convert their existing property into an investment and rent it out rather than sell. This option requires the lender to approve the loan structure change and assess whether the rental income is sufficient to cover the loan repayments on that property. For nurses and midwives who qualify for investment loans for nurses, this can be a viable fallback, but it wasn't part of the original plan and may not align with your financial goals. The most straightforward way to avoid these complications is to ensure your existing property is priced and presented to sell within the initial bridging period before you commit to the purchase.
Bridging Loans and LMI Waivers for Nurses
If your loan to value ratio during the bridging period exceeds 80 percent across both properties, you may be required to pay Lenders Mortgage Insurance unless you qualify for an LMI waiver. Some lenders offer LMI waivers to registered nurses and midwives at LVRs up to 90 percent, but these waivers typically apply to standard home loan structures and may not extend to bridging finance depending on the lender's policy.
Westpac, St.George, and Bank of Melbourne offer LMI waivers to registered nurses and midwives at up to 90 percent LVR, subject to a minimum income threshold of $90,000 per annum. However, the application of these waivers to bridging finance scenarios depends on how the lender structures the loan and calculates the combined LVR across both properties. If the bridging loan pushes your total debt above the waiver threshold or if the lender applies a discounted valuation to your existing property, you may still be required to pay LMI even if you would otherwise qualify for a waiver on a standard purchase. This is an area where working with a broker who understands both bridging finance and the specific LMI waiver policies for healthcare professionals can make a material difference to the structure and cost of your loan. For more detail on how LMI waivers work for nurses, see our guide to no LMI loans for nurses.
Call one of our team or book an appointment at a time that works for you. We'll walk through your current position, the property you're looking to buy, and whether bridging finance or another option gives you the certainty and flexibility you need without unnecessary cost or risk.
Frequently Asked Questions
How long does a bridging loan last?
A bridging loan typically lasts six months, with the option to extend to twelve months if your existing property hasn't sold. Extensions aren't automatic and require lender approval, often with conditions around pricing or marketing.
Can I get a bridging loan if I'm a registered nurse?
Yes, registered nurses can access bridging finance. Lenders assess your ability to service both loans during the bridging period, and stable PAYG income works in your favour during the approval process.
What happens to the interest on a bridging loan?
Interest on the bridging portion is usually capitalised, meaning it's added to your loan balance rather than paid monthly. This interest compounds over the bridging period and is repaid when your existing property sells.
Do I need to pay LMI on a bridging loan?
You may need to pay Lenders Mortgage Insurance if your combined loan to value ratio across both properties exceeds 80 percent. Some lenders offer LMI waivers to nurses at up to 90 percent LVR, but these may not apply to all bridging finance structures.
What if my property doesn't sell during the bridging period?
If your property doesn't sell, you can apply to extend the bridging loan, refinance both properties into a standard structure, or convert your existing property to an investment. Each option has costs and requires lender approval.
