What is a bridging loan and who can get one?

If you’re looking to sell and purchase a new property, understanding exactly what bridging finance is can make the difference between getting or not getting the property of your dreams.

Here, we cover the basics of bridging loans, explaining what they are and who should get one. Discover if bridging finance is the best option for you and your family.


So, what is a bridging loan? A bridging loan, a.k.a., a tideover loan, is a short-term (often interest-only) loan designed to help homeowners purchase a new home before they have sold an existing property. Bridging finance can help you move quickly within the market to buy the right property without the pressure to line up settlement dates.

For example, if you’re planning to build a new home, a bridging loan can help you purchase the land to develop on while you live in your existing home. As it can be difficult to pay for two mortgages at once (one on the old property, one on the new property), many homeowners use bridging finance to make these payments more manageable.

Specific requirements can vary depending on your provider and the type of bridging loan you take out. For example, some providers will finance your new property and take over your existing property’s mortgage while others will not.

When you get a bridging loan with Avanti Finance, you can take out bridging finance for a period of up to 12 months, we will consider your requirements and affordability to set interest-only payments or, in some cases, capitalise interest.


What is the difference between a closed vs open bridging loan?

If you’re a homeowner looking to sell and purchase a new property, a closed or open bridging loan could help you get there.

  • Closed bridging finance is a short-term loan with a specific exit strategy (e.g., you know when you’ll have the funds to pay off the loan, such as an exact date for the sale of your existing property).
  • Open bridging finance is a short-term loan without a defined exit strategy/end date (e.g., if you are still in the process of selling your existing property and don’t have a specific end date to repay your loan by).

The lender is financing your new home in both situations, but open bridge loans are generally a higher risk for lenders. This means that interest rates can be higher.



There are several factors to consider when deciding whether to take out a bridging loan. For example, will you be able to meet repayments for both your current loan and bridging loan? Additionally, how long will you need the funds for? If your property is still on the market, also consider how certain you are that it will sell in the time and for the amount expected. If you want to figure out if bridging finance is right for you, the team at Avanti Finance can walk you through these considerations.

Another thing to note is that some providers require buyers to have perfect credit scores. However, this is not a requirement with Avanti Finance. We look at your credit score, but we also look at each application based on its own merits to find a suitable solution for you.



Avanti Finance provides short-term and long-term loans to help you get ahead in life. We offer home loans in NZ, with bridging options to help you secure your new home before your current property is sold. Get in touch with the team to see how we can help you finance your new home or apply for a home loan today to get the process underway.

This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact Avanti Finance or your financial adviser. Neither Avanti Finance nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation or omission, whether negligent or otherwise, contained in this publication. References to third-party websites are provided for your convenience only. Avanti Finance accepts no responsibility for the availability or content of such websites.

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