Property-Backed Bridging Finance for Time-Sensitive Transactions

A bridging loan is short-term finance that covers a temporary funding gap between an immediate requirement and a future repayment event. It can help eligible borrowers complete a property purchase, settle a transaction, refinance an existing loan, pay out a caveat or private lender, complete a development, access equity or manage a defined commercial funding requirement while waiting for a sale, refinance or settlement.

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Assurity Capital provides private, property-secured bridging loans for eligible business, investment, development, commercial and time-sensitive property scenarios throughout Australia. Each bridging finance application is assessed individually, based on the security property, available equity, current debt, loan purpose, required timeframe and a realistic exit strategy.

Bridging finance is not intended to be long-term debt. It is designed to bridge a specific gap, with a clear plan to repay the loan when the next event occurs.

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What Is a Bridging Loan?

A bridging loan—also called bridging finance, bridge finance or a bridge loan—is a short-term loan secured against property. It gives a borrower access to funds now while they wait for a future event that will repay the loan.

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That future event is known as the exit strategy. It may be the sale of a property, settlement of a property transaction, refinancing to another lender, completion of a development, sale of an asset or another documented source of funds.

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For example, a property owner may need funds to settle on a new investment property before their existing property sells. A developer may need to refinance a maturing construction loan while completed stock is sold. A business owner may need to pay out a private lender before a longer-term commercial refinance is available. In each example, bridging finance provides temporary funding between the immediate need and the expected repayment event.

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A standard bank bridging loan is often associated with buying a new home before selling an existing home. Private bridging finance may also be used for more complex business, investment, commercial, development and refinance transactions where timing, policy or documentation does not fit a mainstream bank’s requirements.

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How Do Bridging Loans Work?

A bridging loan is secured against Australian property. The lender assesses the value of the security, existing debt, amount required, purpose of the funds and the proposed exit strategy.

Once the finance settles, the funds may be used for the approved purpose, such as purchasing property, refinancing a loan, paying out a caveat, meeting a settlement deadline or completing a commercial transaction. The borrower then repays the bridging loan when the exit occurs.

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The bridging-loan process generally involves:

• Identifying the funding requirement and deadline

• Confirming the property offered as security

• Assessing existing mortgages, debt and available equity

• Establishing the proposed loan amount and term

• Reviewing the purpose of funds

• Assessing the exit strategy

• Completing valuation, legal and lender due diligence

• Settling the facility and releasing funds for the approved purpose

• Repaying the loan through sale, refinance, settlement or another agreed exit

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The loan structure, timeframe, interest and fees vary according to the individual scenario. Finance is subject to acceptable security, lender criteria, legal documentation and approval.

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Common Uses for Bridging Finance

Bridging loans may be considered for a range of eligible property, investment, business and commercial purposes, including:

• Buying a property before another property is sold

• Bridging the gap between property purchase and sale settlement

• Urgent residential, commercial or investment-property settlements

• Refinance of an existing private loan or caveat

• Payout of a first or second mortgage

• Development completion funding

• Residual stock finance for completed but unsold development stock

• Bridging a gap while bank or non-bank refinance is being arranged

• Property investment opportunities requiring a defined timeframe

• Business working capital where property security and a credible exit are available

• ATO debt or creditor payments connected to a genuine business or investment purpose

• Commercial property deposits, acquisition costs or time-sensitive transactions

• Funding improvements that support a defined sale or refinance strategy

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A bridging loan should have a clear commercial rationale. The funds should solve a temporary timing issue, not create a longer-term debt problem without a realistic repayment pathway.

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Bridging Finance to Buy Before You Sell

One of the most common searches for bridging loans in Australia is “buy before you sell.” This structure may help a borrower purchase a new property before the sale of their existing property has settled.

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The bridge loan temporarily covers the gap between the purchase price, available equity and the future sale proceeds of the existing property. Once the existing property sells, the net sale proceeds are applied to reduce or repay the bridging debt. If the borrower is upgrading to a more expensive property, there may be an ongoing loan balance after the sale; this is often referred to as end debt.

The key risk is that the existing property may take longer to sell or sell for less than expected. That can increase interest costs, reduce the funds available to repay the bridge loan and leave the borrower with a higher end debt than anticipated. A borrower should assess conservative sale values, holding costs, contingency plans and the ability to meet obligations while both properties are held.

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Bridging Loans for Property Investors

Property investors may use bridging finance to act on a time-sensitive purchase, manage a settlement gap, refinance an existing facility or release equity from property for a defined investment opportunity.

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For an investment-property bridging loan, lenders may consider the security property, rental income where relevant, existing debt, available equity, property type, location and the proposed exit. The exit might be sale of another property, refinance to a longer-term investment loan, settlement of a sale or repayment from another documented source.

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A bridging loan may provide flexibility for the right transaction, but it should not be used simply to take on more property debt without a realistic plan for the loan’s maturity date.

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Bridging Finance for Developers and Completed Projects

Developers may need bridging finance when a construction loan is approaching maturity, a project requires final completion works, or completed stock needs to be held and sold over time.

Development bridging finance can be considered for eligible property scenarios involving construction completion, refinance of development debt, residual stock, settlement delays, sales timing or another defined project requirement. The lender will generally assess the project stage, remaining works, title and registration status, sales schedule, valuation evidence, existing debt, developer experience and the exit strategy.

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For completed but unsold apartments, townhouses, houses, commercial lots or mixed-use stock, residual stock finance may be more appropriate than a standard bridge loan. The key distinction is that residual stock finance is specifically designed around the sell-down or refinance of completed remaining development stock.

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Bridging Loans to Refinance Private Lenders and Caveats

A bridging loan may be considered where a borrower needs to repay an existing private lender, caveat, first mortgage, second mortgage or another short-term property-secured facility before the current loan matures.

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This may be relevant if the borrower has a confirmed property sale, bank refinance in progress, development settlement pending or another exit event expected within a defined period. The new bridging facility should not simply delay an unworkable debt position. It must provide a realistic path to repayment.

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Before refinancing private debt, borrowers should consider:

• The total amount required to pay out the existing lender

• Interest, fees, legal and discharge costs

• Whether the new loan amount includes sufficient contingency

• The exact maturity date of the new facility

• The reliability of the proposed refinance, sale or settlement

• The consequences if the expected exit is delayed

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A clear repayment plan and complete documents are critical in refinancing scenarios.

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Open Bridging Loans and Closed Bridging Loans

A closed bridging loan has a clearly identified exit date or repayment event, such as a signed property sale contract with a known settlement date. The lender has more certainty about how and when the loan will be repaid.

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An open bridging loan does not have a fixed sale or settlement date. For example, a borrower may be purchasing a property before their existing property has been sold. In this situation, the lender relies more heavily on valuation evidence, marketability, available equity, the borrower’s financial position and the proposed sales strategy.

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Both structures require a credible exit. An open bridge does not mean the loan can remain outstanding indefinitely; it still has a defined loan term and repayment obligations.

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First-Mortgage and Second-Mortgage Bridging Finance

A bridging loan can be structured as a first mortgage or second mortgage, depending on the property and existing debt.

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A first-mortgage bridging loan is first in priority over the security property. It may be used where existing debt is being repaid, refinanced or there is no prior mortgage over the property.

A second-mortgage bridging loan sits behind an existing first mortgage. It may allow a borrower to access available equity without replacing their first lender. The lender will assess the existing first mortgage, total debt, property value, available equity, security ranking and exit strategy.

A second mortgage carries additional complexity because the second lender’s security ranks after the first lender. The borrower must understand all obligations connected with both loans and should seek legal advice before proceeding.

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What Does a Bridging Loan Cost?

The cost of bridging finance depends on the individual transaction. It may include interest, establishment fees, legal costs, valuation costs, discharge fees, broker fees where applicable and other charges set out in the loan documents.

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Private bridging finance can be more expensive than a conventional bank loan because it is often used for short-term, non-standard or time-sensitive transactions. The borrower should compare the full cost of the loan.

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Bridging Loans Australia

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Short-Term Property Finance for Purchases, Settlements, Refinance and Time-Sensitive Opportunities

A bridging loan is short-term property finance designed to cover a defined gap between an immediate funding requirement and an expected future repayment event. That event may be the sale of a property, settlement of a transaction, refinance to another lender, completion of a development, release of equity or another documented source of funds.

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Assurity Capital provides private, property-secured bridging finance for eligible business, investment, commercial, development, refinance and urgent settlement scenarios across Australia. A bridging loan may be considered where suitable Australian real estate is available as security, the purpose of funds is clear and the borrower has a practical, credible exit strategy.

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Bridging finance is designed to solve a timing problem. It is not a replacement for a long-term funding plan, and it should not be entered into without understanding the loan term, interest, fees, security obligations and exit requirements.

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What Is a Bridging Loan?

A bridging loan—also called bridging finance, bridge finance or a short-term property loan—is finance that “bridges” the period between an immediate need for funds and an expected repayment source.

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For example, a borrower may need to settle a property purchase before another property sells, refinance an expiring loan while arranging longer-term finance, complete a business or commercial transaction, or pay out an existing lender before a known sale or settlement occurs.

Bridging loans are usually secured against property. The property may be residential, commercial, investment, development or specialised real estate, subject to the individual lender’s criteria and assessment.

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The key feature of a bridging loan is the exit strategy. Before the loan is advanced, the borrower must be able to explain how the finance will be repaid within the agreed term.

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How Does Bridging Finance Work?

Bridging finance provides funds now against property security, with repayment expected when a future event occurs. That future event could be a property sale, refinancing facility, settlement, business sale, development completion or another verified source of funds.

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The process generally involves:

• Identifying the funding requirement and required settlement date

• Assessing the property offered as security

• Reviewing existing mortgages, caveats and available equity

• Confirming the purpose of the bridging loan

• Reviewing the proposed loan term

• Assessing the exit strategy and supporting evidence

• Completing valuation, legal and security documentation where required

• Settling the bridging facility and releasing funds for the approved purpose

• Repaying the loan when the exit occurs

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The time between settlement of the bridging loan and repayment is known as the bridging period. The facility remains outstanding until it is repaid, refinanced or otherwise discharged in accordance with the loan documents.

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Common Uses for Bridging Loans

Bridging loans can be considered for eligible property, business, investment and commercial purposes, including:

• Buying a property before another property is sold

• Bridging the gap between a property purchase and sale settlement

• Urgent residential, commercial or investment property settlements

• Refinancing a maturing private loan, caveat or existing mortgage

• Paying out an existing lender before a planned refinance

• Funding a property purchase while longer-term finance is being arranged

• Development completion costs or post-completion funding

• Residual stock finance for completed but unsold development stock

• Business acquisition, working capital or commercial opportunities where property security is available

• Paying a deposit or meeting a time-sensitive contractual obligation

• Releasing equity for an approved investment or business purpose

• Managing a short-term gap created by delayed settlements or transactions

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A bridging loan should have a specific purpose and a defined repayment pathway. The more clearly the transaction and exit can be documented, the easier it is to assess whether bridging finance is suitable.

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Bridging Finance for Buying Before Selling

One of the most common searches for bridging loans in Australia is from borrowers who want to buy a new property before their current property has sold.

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In this type of transaction, bridging finance may help cover the period between buying the next property and receiving the sale proceeds from the existing property. The borrower may temporarily have debt relating to both properties. Once the existing property sells, the net sale proceeds are generally used to reduce or repay the bridging facility.

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This can help a buyer act on a purchase opportunity without first completing the sale of their current property. However, the borrower needs to carefully assess the sale price, expected time on market, selling costs, existing mortgage debt and the debt that will remain after the sale.

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Traditional bank bridging loans commonly refer to the temporary combined debt as “peak debt” and the remaining debt after the sale as “end debt.” Aussie Home Loans Private bridging finance may be structured differently, so borrowers should review the exact facility terms before proceeding.

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Bridging Loans for Property Settlements

A bridging loan may be relevant where a property settlement is approaching and a borrower needs short-term property finance to complete the transaction.

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This can arise where:

• A sale has not settled in time to fund a purchase

• A refinance is approved in principle but not yet settled

• A bank process has been delayed

• A purchaser needs to complete before a contractual deadline

• An investor has identified an urgent acquisition opportunity

• An existing lender must be paid out before a new facility can proceed

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The finance must be structured around a realistic exit. Simply having a settlement deadline is not enough; the borrower needs a credible plan for repayment, refinance or sale within the loan term.

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Bridging Loans for Refinance and Private Lender Payouts

A borrower may use bridging finance to refinance an existing private lender, caveat, second mortgage or other maturing debt while a longer-term refinance is completed.

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This may be relevant where the existing facility is approaching maturity but the borrower’s intended refinance, property sale or other exit has been delayed. A bridging loan can potentially provide time to complete that process, provided the security and exit remain acceptable.

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Refinancing one short-term loan into another does not remove the underlying risk. It may increase costs and still requires a clear final exit. Before refinancing, borrowers should understand the total interest, fees, legal costs, maturity date and what will happen if the expected refinance or sale does not occur on time.

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Bridging Loans for Developers and Investors

Developers and investors may use bridging finance for property-related transactions that have a defined short-term funding gap.

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Eligible scenarios may include:

• Site acquisition before longer-term development finance is finalised

• Funding a deposit or settlement on an investment property

• Refinancing development debt after practical completion

• Holding completed but unsold residual stock while sales are finalised

• Bridging a purchase, sale, subdivision, development completion or refinance

• Paying out construction finance, a caveat or another existing property-secured facility

• Releasing equity from property for a commercial or investment purpose

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For development and residual stock scenarios, lenders may examine the underlying project, construction status, remaining stock, current debt, valuation evidence, sales activity, borrower experience and exit strategy. A bridging loan is most appropriate where there is a clear commercial reason for the short-term funding and a supported path to repayment.

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Bridging Loans for Business and Commercial Purposes

Property-backed bridging finance may also be considered for eligible business and commercial transactions. It can be relevant where a business owner needs funds for a time-sensitive opportunity and has suitable property security with a clear exit plan.

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Examples may include a business acquisition, supplier payment, stock purchase, commercial settlement, urgent creditor payment, lease-related obligation or working-capital requirement pending a confirmed refinance, asset sale or incoming transaction.

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Business bridging finance should not be used as indefinite working capital. The funding purpose must be clear, the loan amount should be proportionate to the need and the proposed exit must be realistic.

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First Mortgage and Second Mortgage Bridging Loans

A bridging loan may be structured as a first mortgage or second mortgage, depending on the security and existing debt.

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A first mortgage bridging loan is first in priority over the security property. It may be used where the existing debt is being repaid at settlement or where there is no existing mortgage requiring priority.

A second mortgage bridging loan sits behind an existing first mortgage. It may be considered where a borrower has available equity in a property but does not want, or is not able, to refinance the first mortgage immediately. The first lender’s position, total debt, property value and available equity are important considerations.

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Both first and second mortgage bridging finance involve risk. Borrowers should understand the priority of each lender, the total debt secured against the property and the consequences if the loan is not repaid.

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What Lenders Consider for a Bridging Loan

Bridging loan approval is not based only on the property value. The lender will generally consider the full transaction, including:

• The purpose of the funds

• Required loan amount and settlement deadline

• Property type, location and estimated value

• Existing mortgages, caveats and other registered interests

• Available equity and overall loan-to-value position

• Borrower, company, trust and guarantor structure

• Current liabilities and relevant financial information

• Loan term and interest requirements

• The credibility of the proposed exit strategy

• Evidence supporting sale, refinance, settlement or another repayment source

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A complete summary of the scenario can help identify whether a bridging loan structure may be feasible before formal documentation is commenced.

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What Is an Exit Strategy?

An exit strategy is the planned method for repaying the bridging loan at or before the end of its term. It is the most important part of bridging finance.

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Common bridging-loan exits include:

• Sale of the security property

• Sale of another property or investment asset

• Refinance to a bank or longer-term non-bank lender

• Settlement of a property sale or commercial transaction

• Sale of completed development stock

• Repayment from verified business revenue or a confirmed capital event

• Sale of a business or another documented source of funds

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A strong exit strategy is specific, realistic and supported by evidence. For a sale exit, this may include a current appraisal, sales campaign, comparable evidence, contract or settlement information. For a refinance exit, it may include indicative lender terms, serviceability information and a realistic timeframe.

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A bridging loan should not depend on an unsupported assumption that a property will sell at a certain price or that another lender will refinance the debt without evidence.

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Bridging Loan Costs and Repayments

The cost of a bridging loan can include interest, establishment fees, legal fees, valuation fees, discharge fees and other transaction-specific costs. The actual costs depend on the property, loan amount, loan term, security position, complexity and lender requirements.

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Interest may be paid on a regular basis or capitalised into the loan, depending on the structure. Capitalised interest means interest is added to the loan balance rather than paid monthly, which can increase the total amount required to repay at the end of the term.

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A bridging loan may be more expensive than mainstream long-term finance because it is often used for a short-term, time-sensitive or non-standard transaction. Borrowers should compare the full cost of the facility—not only the interest rate—and consider whether the expected exit will generate sufficient funds to repay all outstanding debt and costs.

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Bridging Loan Risks and Important Considerations

Bridging finance can be useful where there is a clear temporary gap and a well-supported exit. It can be risky where the expected sale, refinance or settlement is uncertain.

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Key risks include:

• The security property takes longer to sell than expected

• The sale price is lower than anticipated

• Refinance is delayed, declined or offered on different terms

• Interest and fees increase the debt over the bridging period

• Existing liabilities leave less equity than expected

• The borrower cannot meet repayment obligations at maturity

• The lender enforces its security rights if the loan defaults

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When a bridging loan is secured against property, failure to repay may place the property at risk. Borrowers should obtain independent legal, financial and accounting advice where appropriate and should not proceed unless they understand the loan documents and exit requirements.

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What Information Is Needed for a Bridging Loan Enquiry?

For an initial bridging-finance assessment, provide:

• The amount required

• The exact purpose of the loan

• The settlement date or funding deadline

• Details of the property offered as security

• Estimated property value and existing debt

• Details of any caveats, second mortgages or other encumbrances

• Purchase contracts, sale contracts or refinance information where relevant

• Company, trust, director and guarantor details

• A clear explanation of the proposed exit strategy

• Supporting documents for the expected sale, refinance, settlement or repayment source

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Clear information allows Assurity Capital to assess whether the transaction may suit a property-backed bridging finance structure.

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Why Enquire with Assurity Capital?

Assurity Capital provides private, property-secured bridging loans for eligible business, investment, commercial, development, refinance and urgent settlement scenarios across Australia.

If you need short-term bridging finance and have suitable property security with a defined funding purpose and credible exit strategy, contact Assurity Capital to discuss your scenario.

Finance is subject to assessment, acceptable security, lender criteria, fees, legal documentation and approval.

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Frequently Asked Questions

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What is a bridging loan in Australia?

A bridging loan is short-term finance that helps cover the gap between an immediate funding need and a future repayment event, such as selling a property, settling a transaction or refinancing to longer-term finance.

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How long do bridging loans last?

The term depends on the lender, security, purpose and exit strategy. Bridging loans are intended to be short-term. The loan term should allow enough time for the proposed sale, refinance or settlement while remaining realistic.

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Can I get a bridging loan before selling my property?

Potentially. Bridging finance may allow a borrower to buy or settle on another property before the current property sells, subject to the security position, total debt, property values, ability to service the debt where required and exit strategy.

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Can I use a bridging loan to refinance a private lender or caveat?

Potentially. Bridging finance may be considered to pay out a maturing private loan, caveat or existing mortgage while a sale or longer-term refinance is completed. The final exit must still be credible.

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Are bridging loans secured against property?

Most bridging loans are property-secured. The lender may take a first mortgage, second mortgage or another acceptable form of security over eligible real estate.

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Are bridging loans expensive?

Costs vary by lender and transaction. Bridging finance can involve higher costs than long-term mainstream finance because it is often short-term, time-sensitive or non-standard. Consider interest, fees, legal costs, valuation costs and the total repayment amount.

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What happens if my property does not sell before the bridging loan ends?

The loan must still be repaid in line with its terms. The borrower may need to seek an extension, refinance or sell another asset, subject to lender agreement. If the borrower cannot repay, the lender may enforce its rights against the security property.

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Can bridging finance be used for business purposes?

Potentially. Property-backed bridging finance may be considered for eligible business and commercial needs where there is a defined purpose, suitable security and a practical repayment or exit strategy.