Quick answer
Bridging finance is a short-term, property-secured loan that covers a timing gap — buying before you've sold, settling before a refinance completes, or funding until a large payment arrives. In New Zealand, property-secured business bridging runs from $20,000 to $5,000,000. It can settle quickly, often within 24–48 hours, and is repaid from a specific event such as a sale or refinance.
Key points
- Covers a gap between two financial events.
- Secured on residential or commercial property.
- Repaid from the event that ends the gap — a sale, refinance or payment.
- The exit should be signed, dated or highly likely before you borrow.
- Amount
- $20,000 to $5,000,000
- Security
- Residential or commercial property
- Speed
- Up to $5m possible within 24–48 hours
- Exit
- Sale, refinance or confirmed payment
Business rarely lines up neatly. The new premises are ready before the old ones sell. The bank’s approval is through but its settlement team is a week behind. A buyer wants to settle, but your funds are tied up elsewhere. Bridging finance carries you over those gaps so the deal on the other side doesn’t fall over.
What does bridging finance actually bridge?
Typical business bridging situations in New Zealand:
- Buy before you sell — new premises, a second site or a business property, while the existing property is on the market.
- Settle before refinance — the bank’s loan is approved but won’t be ready by settlement day.
- Fund before a payment lands — a confirmed contract payment, insurance settlement or business sale is due, but money is needed now.
- Clear a debt before a sale — removing an encumbrance so a sale can proceed.
In each case there are two events: the one that needs money now and the one that will repay it.
How fast can bridging finance be arranged?
Bridging is usually driven by a settlement date, so speed matters. Property-secured amounts from $20k to $250k are possible the same day; larger bridging loans up to $5m are possible within 24–48 hours when the valuation and legal steps line up. Our aim remains to have you funded within 24 hours of first applying, and we’ll be honest early if a full valuation or a third party will push that out.
A typical sequence:
- Application with both properties (or the asset) and the dates involved.
- Title searches and a value check on the security.
- Evidence of the exit — a sale agreement, a bank approval letter, a contract.
- Offer, legal advice and signing.
- Settlement, timed to the deadline.
Settlement date already in the diary? Apply now and give us the date in the purpose field so we can work back from it.
How do lenders size a bridging loan?
They look at the total security, what’s owing on it and the strength of the exit.
| Factor | What a lender asks |
|---|---|
| Peak debt | What’s the maximum owed while the gap lasts? |
| Security value | What are the properties worth, and what’s already owing? |
| Exit certainty | Is the sale unconditional? Is the refinance approved in writing? |
| Exit timing | When exactly will the money arrive? |
| Backup | If the exit is late, what’s plan B? |
An illustrative example: a Waikato agricultural contractor buys a $1,300,000 yard and workshop, settling in three weeks. Its current depot is under an unconditional sale contract settling in ten weeks, with $900,000 of net proceeds expected. A bridging loan secured over both properties covers the seven-week gap and is repaid on the depot settlement. (Illustrative only.)
Closed or open bridging — which is safer?
Closed bridging has a confirmed exit: an unconditional sale with a settlement date, or written refinance approval. Lenders like it, and it’s generally quicker and cheaper.
Open bridging relies on an expected exit — a property listed but not sold, for instance. It’s riskier for everyone. If you’re considering open bridging, think hard about what happens if the sale takes twice as long or achieves less than hoped.
What costs should I expect?
Ask for every item in dollars:
- Establishment and legal fees.
- Valuation costs.
- Charges for the expected term — and for an extra month or two if the exit runs late.
- Any minimum term or early repayment terms.
Then compare against the cost of losing the deal you’re bridging to. Our guide to planning an exit includes a simple backup-plan checklist.
Bridging or a caveat loan?
For very short gaps with a small shortfall, a caveat loan can be quicker and simpler. For larger amounts, two properties or a longer gap, structured bridging finance is usually the better fit. If the gap is caused by a shortfall at settlement rather than timing, see our page on settlement shortfalls.
What documents prove the exit on a bridging loan?
Lenders want evidence, not expectation. The stronger the paperwork, the faster and cheaper the bridge:
| Exit | Best evidence |
|---|---|
| Sale of a property | Unconditional sale and purchase agreement showing the settlement date and price |
| Refinance to a bank | Written approval letter with conditions you can meet |
| Business sale | Signed agreement, with the buyer’s finance confirmed |
| Contract or insurance payment | Contract or claim acceptance showing the amount and payment date |
If the sale is still conditional, expect the lender to treat the bridge as open rather than closed. That usually means a lower loan amount, more security or a shorter leash.
Common bridging mistakes to avoid
- Assuming the sale price. Agents’ appraisals aren’t valuations; lenders use their own figure.
- Ignoring holding costs. Rates, insurance and loan charges on two properties add up over a few months.
- Choosing a term that ends on the expected settlement date. If the sale slips by a fortnight, you’re in default. Build in a buffer.
- Forgetting GST. Commercial property transactions can involve GST; your lawyer and accountant should confirm the treatment before you size the bridge.
- Leaving the lawyer out until the end. Bridging involves two sets of property documents — brief your lawyer when you apply.
Keep your deal on track
When two good events are separated by an awkward few weeks, bridging finance stops the first one from failing. Check your options in about a minute. Asking won’t involve a credit check, we won’t distribute your application to a crowd of lenders, and a real specialist will work back from your settlement date with you. Give us the real dates, values and what’s owing — precise answers let us set the bridge up correctly the first time.
Frequently asked questions
What is 'open' versus 'closed' bridging?
Closed bridging has a fixed exit date, such as an unconditional sale settling on a known day. Open bridging has an expected exit without a fixed date. Lenders are more comfortable with closed bridging.
Can bridging finance be used to buy commercial property?
Yes, for business purposes — for example, buying new premises before the old ones sell, or settling while bank finance is still being finalised.
How is interest handled on a bridging loan?
Some bridging loans have regular repayments; others add the charges to the loan to be paid at the end. Ask for the total cost in dollars under each option.
What happens if my sale falls through?
You'd need another exit — refinancing, selling another asset or extending, which may not be available or may cost more. Plan a backup before you borrow.