Bridging Loans for Urgent Property Purchases in Merricks

A bridging loan could let you buy your next home before your current one has sold. It is a short-term arrangement, and it works best when you plan the exit before you sign anything.

If you live in Merricks and a home on the Peninsula has come up unexpectedly, you may not have months to wait for a sale. This article walks through how bridging finance works, what it could cost, and how to decide if it suits you.

What Is a Bridging Loan and How Does It Work?

A bridging loan is short-term property finance that helps you fund a new home while you still own your old one. APRA describes bridging finance as owner-occupied lending for people moving their main residence who also have an existing owner-occupied loan, and it expects the arrangement to wrap up within twelve months.

In practice, you carry two properties for a period. Your lender looks at your existing debt, the new loan, and your plan to sell. Our bridging loans page covers the basics if you want a wider overview.

How Long Is the Bridging Period?

Most bridging arrangements are designed to be temporary, with APRA expecting completion within twelve months of the loan starting. Ask your lender about the specific bridging loan term and what happens if the old home is unsold when it ends.

The time limit matters because your sale is part of the lender's thinking. APRA's practice guidance (APG 112) says a lender would generally consider the sale of a property in its assessment only where there is an intention to have a signed contract of sale due to complete within twelve months of origination. Bridging loans are given as an example. This is guidance on sound practice, and individual lenders set their own policies. A realistic sale timeline is therefore part of the application, not an afterthought.

How Is Bridging Finance Assessed?

Lenders assess a bridging loan application on your income, your existing debts and the new loan together. APRA expects lenders to apply a serviceability buffer of at least 3 percentage points over the loan rate, and that buffer applies to both new and existing debts.

There is one helpful detail. APRA's debt-to-income limits, which started on 1 February 2026, cap each lender's new lending at a debt-to-income ratio of six times income or more to 20% of its new owner-occupied lending and 20% of its new investment lending. Owner-occupied bridging finance, as APRA defines it, is one of the exempt categories, and how it is treated in lender measurement can vary by lender type.

Lenders also have responsible lending duties. If you could only repay by selling your home, the law presumes that could cause substantial hardship unless the lender proves otherwise. Expect plenty of questions about your plan.

A Worked Example: Buying First, Selling After

Consider a Merricks couple who find a home they love and need to move quickly. Their current home is yet to be listed. They arrange temporary finance that covers the new purchase while they prepare the old home for sale.

For illustration only, assume the combined borrowing is $1,000,000 at an example rate of 6.75% p.a. Interest alone on that amount would be about $67,500 across a full year, or roughly $5,625 a month. Real figures depend on your lender, deposit and how interest is charged, so please treat this as a guide only.

Their broker maps out the plan. The couple sell within a few months, the proceeds clear the old loan, and the remaining debt moves onto a standard home loan. The outcome is that they bought the right home without selling under pressure. The trade-off is that they carried two sets of costs while they waited, which is exactly what the plan needed to allow for.

Bridging Loan Costs and Risks to Weigh Up

Bridging finance usually costs more than a standard home loan, and the main risk is that your old home takes longer to sell than planned. Rates, fees and structures vary by lender, so ask for the full picture of bridging finance costs before you decide.

Some lenders allow interest to be capitalised, which means it is added to the loan rather than paid monthly. That eases cash flow but grows the debt. If a sale falls through, you could be holding two homes with no clear end date. Check your lender's position on this before you apply, and keep a buffer in savings.

You can test the numbers with our mortgage repayment calculator and see what your borrowing capacity might look like.

Tax and Land Tax When You Own Two Homes

Owning two homes for a while can affect capital gains tax and land tax, so speak to your accountant before you buy. The ATO says you may be able to treat both homes as your main residence for up to 6 months if certain conditions are met, including living in the old home for at least 3 months in the prior 12.

If the old home takes longer than 6 months to sell, the exemption applies to both homes only for the last 6 months before sale. Victoria also has a transitional land tax exemption for owners of two homes, but conditions apply, such as income rules and timing. Check the State Revenue Office Victoria and confirm your situation with an accountant.

Alternatives to a Bridging Loan

If bridging finance feels like too much, you could draw on equity in your current home or sell first and rent for a short time. Each option has a trade-off.

An equity release lets you use the value in your existing property for a deposit, but it adds to your debt. Selling first removes the double-up of costs, though it may leave you rushing to find a home. If you are moving up in size, our upgrading your home page outlines further options.

Planning Your Exit Before You Apply

Your exit strategy is the most important part of any bridging arrangement. Decide when the old home will be listed, what price range you would accept, and how long you can comfortably carry both loans.

Get an appraisal before you commit, and ask yourself what you would do if the sale took twice as long. A good answer to that question is usually what separates a calm bridging period from a stressful one. If you want a local view, our team at Merricks can talk it through with you.

Call one of our team or book an appointment at a time that works for you, and we will map out your options together before you make an offer.

Frequently Asked Questions