Planning to buy your next home before selling your current one? Our bridging loan calculator helps you estimate your borrowing capacity, peak debt, ongoing loan balance and estimated interest costs in just a few minutes.
Whether you’re upgrading, downsizing, or relocating, this calculator gives you a clearer picture of your finances before you apply for a bridging loan.
What is a Bridging Loan?
A bridging loan is a short-term home loan that helps you purchase a new property before your existing home has sold. Instead of waiting for settlement on your current property, you can use the equity you’ve built to secure your next home sooner.
Once your existing property is sold, the sale proceeds are used to reduce or repay the bridging loan, leaving you with your remaining home loan balance, known as your end debt.
When Should You Consider a Bridging Loan?
A bridging loan can be a suitable option if you:
- Want to buy your next home before selling your current property.
- Have found the right property and don’t want to miss out while waiting for your home to sell.
- Want to avoid the pressure of selling quickly or accepting a lower offer
- Have sufficient equity in your current home to fund your next purchase
- Need a short-term finance solution while transitioning between properties
Note: Since bridging finance is designed as a temporary loan, most lenders offer terms ranging from 6 to 12 months.
How Does a Bridging Loan Work?
Begin by applying for a bridging loan based on your financial position and available equity. Once approved, use the provided funds to purchase your new home while still owning your existing property. Sell your current property within the agreed bridging period, and once sold, use the proceeds from the sale to reduce or repay the bridging loan, while any remaining balance becomes your ongoing home loan, also known as your end debt.
The whole point of a bridging loan is to simplify and ease the transition between selling and buying, and the process demonstrates just that, without adding to the pressure one might assume it does.
What is Peak Debt?
Peak debt is the maximum amount you owe during the bridging period. Understanding your peak debt is important because lenders use it to assess your borrowing capacity and determine whether you qualify for a bridging loan.
It combines the remaining balance on your existing home loan, the amount borrowed to purchase your new property, and the eligible purchase costs such as stamp duty and fees. This is the highest level of debt you’ll carry before your current property is sold. Once settlement occurs, the sale proceeds are applied to reduce this amount, leaving your end debt.
How to Use Our Bridging Loan Calculator?
Our calculator is divided into three simple sections: one for information related to your existing property, another for your new property and the last for your bridging loan terms.
Begin by entering details about the home you’re planning to sell, the existing property. The calculator will need your estimated sale price, current mortgage balance, and estimated selling costs, which include your agent commission and marketing expenses, typically around 2-3% of the sale price.
Next, enter information about the property you’re purchasing. We need the purchase price, stamp duty and other purchase costs. If you have any cash or savings to contribute toward the purchase, reveal that too. Finally, provide your expected loan details, including the bridging loan interest rate and the expected bridging period.
Once you’ve entered your information, the calculator will instantly provide an estimate of your peak debt during the bridging period, end debt after your existing property is sold, and estimated interest payable over the bridging term.
You’ll also receive a detailed breakdown showing net sale proceeds from your current property, total cost of purchasing your new home, your existing loan payout and the reduction in debt once your property settles.
Ultimately, these estimates help you understand your financial position before speaking with a lender or submitting a bridging loan application.
Plan Your Next Move With Confidence
Buying before selling doesn’t have to be stressful. Our bridging loan calculator provides a quick, easy way to estimate your borrowing requirements and understand how bridging finance could work for your situation.
Use the calculator to explore different scenarios, compare outcomes and take the next step towards purchasing your new home with greater confidence.
