Gold Coast Homebuyers’ Guide to Bridging Loans

Bridging loans are a lifeline for Gold Coast homebuyers looking to purchase their dream property while their current property is still for sale. These short-term loans offer a financial bridge, giving buyers extra time and flexibility to manage timing differences. However, many borrowers find the process challenging, from understanding peak debt to crafting an effective exit strategy. 

Brokers like LM Edge simplify this process by offering expert financial advice, guiding borrowers through loan applications, and comparing lenders to find the best solution. Their expertise ensures a seamless experience, minimising financial strain during this major milestone. 

Let’s explore everything you need to know about bridging loans and how to maximise it for your homeownership journey on the Gold Coast in 2025.

What Are Bridging Loans? 

A bridging loan is a short-term financing solution designed to bridge the gap between buying a new property and selling your current property. It’s a temporary loan arrangement that covers the finance gap during the transition period, giving you extra time to settle one property sale before completing the next property purchase.

How Bridging Loans Differ from Traditional Home Loans

Traditional home loans focus on funding a single property purchase over a long-term loan term, like 25-30 years. In contrast, bridging loans are short-term loans (usually 6-12 months) that temporarily fund two properties at once. They are also often interest-only during the loan term.

Common Scenarios When Gold Coast Residents May Need Bridging Loans

• Buying your dream home before your current property sells: Avoid the stress of losing your perfect property while waiting for buyers.
• Relocation loans for interstate moves: Move seamlessly without worrying about timing gaps.
• Downsizing journey: Secure your smaller home without rushing your current property sale.
• Renovation loans for resale: Upgrade your original property to increase its sale price.
• Slow property market: Provide a buffer of time to achieve a realistic price estimate for your property.

How Do Bridging Loans Work? 

Bridging loans work by combining the outstanding mortgage on your current property with the loan required to purchase your new property. This total is called the "peak debt." Most loans on the Gold Coast property market are structured as interest-only payments during the bridging period, with the sale proceeds of the original property used to pay off the loan balance.

Scenario: Sarah wants to buy her dream property on the Gold Coast for $800,000 but hasn’t yet sold her current property, which is valued at $500,000 with an outstanding mortgage of $200,000. Sarah decides to use a bridging loan to cover the gap between buying and selling.

Computation Breakdown:

1. Peak Debt:

• Purchase price of the new property: $800,000
• Outstanding mortgage on the current property: $200,000
• Peak debt = $800,000 + $200,000 = $1,000,000

2. Sale Proceeds:

• Sale price of the current property: $500,000
• After paying off the mortgage: $500,000 - $200,000 = $300,000

3. Remaining Loan Balance:

• Peak debt: $1,000,000
• Minus sale proceeds: $1,000,000 - $300,000 = $700,000

Sarah’s remaining loan balance of $700,000 becomes her ongoing mortgage on the new property. During the bridging period (usually 6-12 months), Sarah makes interest-only repayments on the peak debt until the sale of her current property is finalised. This setup gives Sarah the flexibility to secure her new home without rushing the sale of her current property.

Types of Bridging Loans Available on the Gold Coast

Choosing the right type of bridging loan depends on your financial situation and the time frame you need to sell your current property. The Gold Coast property market offers various types of loans to suit different financial strategies and goals.

Closed Bridging Loans: When to Use Them

Closed bridging loans are ideal when the sale of your current property is already underway or has a set completion date. These loans offer a clear time frame and lower potential costs.

Open Bridging Loans: Who They Are Best Suited For

Open bridging loans are designed for those without a buyer for their current property yet. They’re more flexible but often come with higher loan interest rates due to the added risk for lenders.

Why Bridging Loans Are Popular on the Gold Coast's Property Market

The Gold Coast’s property market is competitive, and bridging loans have become a financial tool of choice for many residents. These loans offer practical financial solutions to manage timing differences and financial strain during the buying and selling process.

• Flexibility in Managing the Gap Between Buying and Selling
  Bridging finance provides an effective solution for covering the finance gap when purchasing a dream property before selling the current property. This ensures buyers don’t miss out on opportunities due to timing gaps or delays in the property sale.
  
  
• Interest-Only Repayments Reduce Financial Strain
  During the bridging period, interest-only repayments help borrowers manage cash flow effectively. This financial strategy minimises monthly repayment burdens while the sale proceeds from the original property are finalised.
  
  
• A Buffer of Extra Time in a Competitive Market
  A bridging loan offers extra time to achieve a realistic sale price for the original property. This prevents the need for a quick sale and helps sellers avoid undervaluing their property.
  
  
• Suitable for Renovators and Downsizers
  Bridging loans are a valuable tool for renovators who need additional funds for property upgrades. Downsizers also benefit by securing their next home without rushing the sale of their original property.
  
  
• Access to Funds for Unique Property Purchases
  Gold Coast buyers often rely on bridging finance to access capital for perfect properties, including investment properties or relocation loans. These loans provide short-term financing solutions that align with unique real estate needs.
  
  

Steps to Apply for Bridging Loans

Applying for a bridging loan on the Gold Coast may seem complicated, but breaking it into clear steps makes the process more manageable. Working with mortgage brokers and financial advisors can help you gain expert insight to make informed decisions.

1. Evaluate Your Financial Situation

Start by calculating your total peak debt, including your current mortgage and the loan amounts needed for your dream property. Use a loan calculator to assess affordability and plan for loan repayments.

2. Get a Realistic Property Valuation

Determine the realistic sale price of your current property through professional property valuations. This will guide your financial strategy and help you estimate the sale proceeds.

3. Consult Mortgage Brokers for Financial Advice

Speak to local mortgage brokers to explore bridging finance options and compare loan interest rates from traditional lenders and private lenders. They’ll help tailor the bridging loan term to your financial position and time frame.

4. Prepare a Strong Loan Application

Provide proof of income, tax returns, and details of your ongoing loan and original loan to your current lender. Be ready to explain your exit strategy and financial strategy for the bridging period.

5. Receive Formal Approval and Finalise Terms

Once your loan application is approved, review the loan balance, loan term, and interest-only repayments with your loan experts. This ensures you’re fully prepared for the bridging loan period of 6-12 months.

Case Study

A couple on the Gold Coast wanted to purchase their dream property but hadn’t sold their current property yet. With the help of a mortgage broker, they used a bridging loan to cover the gap between buying and selling.

The short-term loan combined their current mortgage with the new loan amounts, creating a manageable financial solution. During the 6-12 month bridging period, they made interest-only repayments, which minimised financial strain while they finalised the sale of their original property.

By working closely with financial advisors, they developed an exit strategy that paid off their loan balance once their original property sold. Thanks to this effective financial tool, they achieved their property goals without stressing over timing differences or missed opportunities in the competitive real estate market.

FAQs

What is a bridging loan?

A bridging loan is a short-term loan that helps buyers purchase a new property before selling their current property. It’s a financial bridge for property transactions.

How long is the bridging loan term?

Bridging loan terms typically range from 6-12 months, depending on the lender and your financial situation.

Are bridging loans interest-only?

Yes, most bridging loans on the Gold Coast are structured as interest-only loans during the bridging period, reducing monthly repayments.

What are the monthly repayments on a bridging loan?

Monthly repayments are usually interest-only during the bridging loan term, calculated based on the loan interest rate and peak debt amount.

What is the typical interest rate on a bridging loan?

Interest rates on bridging loans are higher than standard home loans, typically ranging between 5-8%, depending on the lender.

How much equity do you need for a bridging loan?

Most lenders require significant equity in your current property, often around 20-30%, to qualify for a bridging loan.

Can bridging loans cover renovations?

Yes, bridging loans can be used as renovation loans, giving you additional money to upgrade your current property for sale or customise your new property.

Final Thoughts

Bridging loans are an effective solution for Gold Coast homebuyers in 2025, offering flexibility and financial stability during one of life’s most exciting transitions. With the right financial advice and a clear strategy, these loans can help you confidently move forward toward your dream property.

Mortgage brokers like LM Edge provide expert guidance and personalised financial solutions to ensure the process is smooth and stress-free. Ready to explore your options? Contact LM Edge today for a free consultation at lmedge.com.au or call 0401 022 182 and take the first step toward your new home.