More choice on the market can be welcome news when you’re looking for your next home. But if you have a property to sell as well, getting the timing right can be tricky.

Cotality’s October figures put the median time on market at 39 days, the highest since August 2020. Buyers have more properties to choose from, while sellers are generally waiting longer to secure a sale.

Bridging finance could help you buy your next home without waiting for your current one to sell. Here’s how it works and what to weigh up before committing to a purchase.

How bridging finance works 

A bridging loan covers the gap between buying your new home and receiving the money from selling your existing property. It’s a short-term arrangement, often available for up to 12 months, depending on the lender.

The finance may cover your existing mortgage, the funds needed for your purchase and costs such as stamp duty. The highest combined amount you owe while holding both properties is called your peak debt.

Some loans require interest payments during this period, while others allow interest to be added to the loan balance. Adding it to the balance can ease the immediate pressure on your budget, but increases what you owe and can mean paying interest on interest.

When your existing property settles, the sale proceeds, after selling costs, go towards reducing or repaying the borrowing. Any amount still owing is your end debt. How that remaining balance will be financed needs to be worked out upfront.

Where it could help 

Moving home is enough work without doing it twice. Bridging finance could let you move straight into your next property, avoiding temporary accommodation, storage and a second set of moving costs.

It may also give you time to prepare your current home for sale after you’ve moved out, rather than juggling inspections, packing and matching settlement dates. Whether you’re upsizing, downsizing or relocating, that flexibility can be appealing.

What you need to consider 

Your equity, the properties involved and your ability to repay the borrowing all help determine whether bridging finance is an option. Beyond getting approval, it’s important to understand what happens if your sale doesn’t go to plan.

➢ How long the sale could take.

Allow time for settlement, not just finding a buyer. A longer bridging period means more interest, so it’s worth comparing what three, six or nine months could cost rather than relying on a quick sale.

➢ Your sale price and remaining loan.

If your home sells for less than expected, you could be left with a larger loan or a shortfall to cover. Work through what the ongoing repayments could look like, including whether your budget could manage a higher interest rate.

➢ The full cost of holding two properties.

Loan setup, valuation and legal fees can add to the bill, alongside overlapping council rates, insurance and other property expenses. These costs matter when comparing bridging finance with the alternatives.

➢ The loan’s deadline.

Bridging finance has a set term, and an extension isn’t guaranteed. If the loan cannot be repaid, the lender may ultimately sell property held as security. Understanding the deadline and discussing a backup plan are important parts of the decision.

What are the alternatives? 

Selling first gives you a clearer picture of the funds available for your next purchase, although you may need somewhere to live between homes.

Negotiating a longer settlement on your purchase could give you more time to sell. In some private sales, an offer conditional on selling your existing property may also be possible, provided the seller agrees. Your solicitor or conveyancer can help you understand the proposed contract conditions.

Thinking about buying before you sell? 

Talk to us before committing to a purchase. We can compare your finance options, work through the costs and repayments, and look at what a longer selling period or lower sale price could mean for your plans.

Get in touch to discuss the finance for your next move.