What is a bridging loan?
A bridging loan allows you to buy a new property before selling your existing one.
During the bridging period, the lender effectively funds:
- your new purchase
- your existing loan
- holding costs during the transition
Once your current property is sold, the loan reduces and settles into its final structure.
That final structure is what determines whether you have end debt or no end debt.
What is end debt (open bridging)?
An end debt bridging loan means you will still have a loan remaining after your existing property is sold.
This is commonly referred to as open bridging.
How it works:
- You purchase the new property
- Your existing property is sold
- Sale proceeds reduce the loan
- A residual loan remains (the “end debt”)
When this is used:
- You are upgrading to a more expensive property
- You intend to hold a loan long term
- You are comfortable servicing the remaining debt
Key considerations:
- You need to demonstrate ongoing servicing capacity
- Lenders assess your ability to afford the end loan
- Borrowing capacity becomes a critical factor
- Structure and lender selection are key
What is no end debt (closed bridging)?
A no end debt bridging loan means the loan is fully repaid once your existing property is sold.
This is commonly referred to as closed bridging.
How it works:
- You purchase the new property
- Your existing property is sold
- Sale proceeds fully repay the bridging loan
- No ongoing loan remains
When this is used:
- You are downsizing
- You have sufficient equity to fully clear the loan
- You do not want ongoing debt
Key considerations:
- Lenders focus heavily on sale price assumptions
- Timing of the sale is critical
- Less emphasis on long-term servicing
- Exit strategy must be clear and realistic
How lenders assess open vs closed bridging
Lender assessment differs significantly depending on whether there is end debt.
For end debt (open bridging):
- full servicing assessment of the remaining loan
- income, expenses and buffers are critical
- borrowing capacity can limit the structure
For no end debt (closed bridging):
- focus on sale price and equity position
- less reliance on long-term servicing
- greater scrutiny on timing and exit strategy
Different lenders have different approaches – and the same scenario can be structured in multiple ways.
Common mistakes with bridging structures
This is where many borrowers get caught out.
Common issues include:
- misunderstanding whether end debt will remain
- overestimating sale price of the existing property
- underestimating time to sell
- choosing a lender that doesn’t suit the structure
- assuming servicing won’t be assessed (when it is)
- not planning for conservative valuation outcomes
In many cases, the structure – not the borrower – is the problem.
How we structure bridging loans at Evolve
We determine the right structure before selecting a lender.
This typically involves:
- modelling both end debt and no end debt scenarios
- assessing borrowing capacity and servicing position
- estimating realistic sale price ranges
- stress-testing timing assumptions
- identifying lenders suited to each structure
- aligning the loan with your long-term strategy
- avoiding unnecessary risk during the transition
The goal is to choose the structure that works – not force the deal into the wrong one.
Speak with a broker before choosing a structure
Choosing between end debt and no end debt isn’t just a technical decision – it shapes the entire outcome.
Before proceeding, it’s worth understanding:
- whether you will have a loan remaining after sale
- how lenders will assess your situation
- what risks exist in your assumptions
- how to structure the loan properly
Getting this right upfront can materially reduce risk and improve your options.
Speak with Evolve Lending & Finance to review your structure and next steps.
Speak with Evolve Lending & Finance to review your structure and next steps.