Bridging finance is a short-term loan that funds the gap between two events — most commonly the settlement of a new property and the sale of an existing one, but also between a development completion and a refinance, between a contract exchange and a major-bank approval, or between a tax liability due and an asset sale settling. The mechanic is simple. The credit decision is not.
This guide explains how bridging finance actually works in Australia in 2026 — the structural mechanics, the difference between bank and private bridging, what LVR and pricing to expect, and the single question every credible bridging lender asks before writing a file.
What bridging finance funds
Three core scenarios drive bridging volume in the Australian market:
- Settlement-to-sale. The borrower has bought a new property and is selling an existing one, but the settlements don't line up. The bridge funds the new purchase, with the proceeds of the old sale clearing the bridge at settlement.
- Refinance bridge. The major bank has agreed to refinance the existing senior debt, but the bank's internal process means formal approval lands 8–12 weeks after the borrower needs the funds. A private bridge runs from the point of need to the bank settlement.
- Development bridge. A completed development project has unsold stock that will sell over the next 6–18 months. The construction lender wants to be paid out; a residual stock bridge sits between construction completion and final sell-down.
Open vs closed bridging
Bridging splits into two categories based on whether the exit is contracted or speculative:
- Closed bridging. The exit is documented and contracted at the time of bridge settlement — typically a property under contract to sell with an unconditional contract, or a major-bank refinance with a signed letter of offer. Risk is materially lower; LVR can sit higher; pricing is tighter.
- Open bridging. The exit is intended but not contracted — the property hasn't sold yet, or the bank approval hasn't formalised. Open bridging carries meaningful timing and execution risk. LVRs are tighter, pricing is wider, and lenders that don't underwrite the exit carefully end up with stretched files.
At Archer Wealth, we write both — but we underwrite the exit before the entry. Open bridging at standard LVR requires a credible exit documented at submission; without it, the bridge gets sized tighter or doesn't get written.
Capitalised vs serviced interest
Bridging loans typically don't require monthly interest payments through the term. Two structures:
- Capitalised interest. The interest accrues into the loan balance over the term, and the borrower repays the loan plus accrued interest at exit. The borrower's monthly cashflow isn't affected during the bridge; instead, the total payout figure grows.
- Serviced interest. The borrower pays interest monthly through the term; the principal is repaid at exit. Used where the borrower has free cashflow available and prefers a flat payout figure.
Most bridging files run capitalised — the whole point of the product is to bridge a cashflow gap, and serviced interest contradicts the purpose. But for borrowers with strong cashflow who want to minimise the total cost, serviced is a legitimate choice.
Bank vs private bridging
Major Australian banks write bridging finance, but inside a narrow envelope:
- Both properties securing the bridge must be in the same major bank.
- The exit (sale of the existing property) typically must be unconditional contracted.
- LVR caps tight (60–65% on the bridged debt against combined securities).
- Bank approval timelines are 4–8 weeks — too slow for most settlement-driven bridging.
Outside that envelope — and most bridging files sit outside it — private bridging is the natural home. Same-day indicative, settlement in 5–10 days, LVR to 65–70% on the bridged debt, capitalised interest, tenor matched to the exit timeline (1–9 months).
LVR and pricing in 2026
Standard Archer Wealth bridging through Archer Flex sits at 65% LVR on the bridged debt against combined securities, tenor 1–9 months, capitalised interest, broker-introduced. Pricing in 2026: 8.99–10.5% per annum on the standard envelope, 1–1.5% origination fee. Files outside the standard envelope go to credit committee with structuring.
The single question that matters
Every credible bridging lender in Australia asks the same question before writing the file: what is the exit? A bridge with a documented exit on a tight timeline is the cleanest product we write. A bridge without a credible exit — “we'll sell the house when we're ready”, “the bank's probably going to refinance us” — is the most expensive product in finance, because it's the one that turns into a problem.
The borrower's job, with their broker, is to make the exit documentable at submission. The lender's job is to size the bridge against the documented exit, not against the wishful version.