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How does a bridging loan work?

The lender combines the debt on your current home and the new purchase into a total called peak debt, for a set bridging period. You generally make limited or no repayments during it, then your old home sells and reduces the loan to the end debt.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

The mechanics centre on peak debt and end debt. Peak debt is everything you owe across both homes during the bridge. When your current home sells, the proceeds pay down that balance to the end debt, which is the loan on your new home that you carry on normally. Understanding these two figures is the key to seeing whether bridging works for you.

The key points

Both debts combine into peak debt for a period.
Repayments during the bridge are often limited.
Selling your old home reduces it to end debt.
Peak debt and end debt are the key figures.

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.