What is Bridging Finance?
Complete guide to short-term bridging loans for NZ businesses and property buyers
Quick Answer:
Bridging finance is a short-term loan (1-12 months) that covers a temporary funding gap. It is priced at a premium to standard term-loan rates because the lender is taking concentrated short-duration risk against a specific exit event. Specific pricing is set per-application — banks offer limited bridging options and most NZ borrowers use non-bank lenders for faster approval.
What is Bridging Finance?
Bridging finance is a type of short-term loan designed to "bridge" a temporary funding gap. It provides immediate access to capital while you wait for longer-term financing or the sale of an asset.
In New Zealand, bridging finance is most commonly used for:
- Property purchases: Buying a new home before your current one sells
- Business acquisitions: Completing a purchase while arranging permanent funding
- Development funding: Covering costs before construction finance is available
- Cash flow gaps: Managing timing differences between income and expenses
How Bridging Finance Works
Typical Bridging Loan Process:
- Application: Apply with property/asset details and exit strategy
- Valuation: Lender values security (usually property)
- Approval: 24 hours to 2 weeks depending on lender
- Settlement: Funds released, often within days
- Interest: Typically charged monthly or capitalised
- Exit: Repay when property sells or permanent finance settles
Most bridging loans in NZ are secured against property. The lender takes a mortgage (first or second) over your property as security. Loan-to-value ratios (LVR) typically range from 65-80% depending on the lender and property type.
Bridging Finance Costs in NZ (2026)
| Cost Type | Bank | Non-Bank |
|---|---|---|
| Interest Rate | Per quote — banks typically offer the lowest pricing for strong-covenant borrowers | Per quote — typically higher than bank pricing to compensate for faster approval + broader risk appetite |
| Establishment Fee | Per quote | Per quote — typically higher than bank fees |
| Valuation | Confirm with lender | Confirm with lender |
| Legal Fees | Confirm with lender | Confirm with lender |
| Exit Fee | Usually none | 0-1% |
Mechanics: Total cost on a bridging loan = principal × rate × term (in years) + establishment fee + valuation/legal. Because terms are short (1-12 months), the annualised rate is applied to a fraction of a year, but establishment + legal fees add a fixed lump. Get total amount payable from each lender's quote for an apples-to-apples comparison.
When to Use Bridging Finance
Good Use Cases
- Buying before selling (with confirmed sale)
- Auction purchases requiring quick settlement
- Business opportunities with time pressure
- Development pre-funding
- Short-term cash flow with clear exit
When to Avoid
- No clear exit strategy
- Speculative property purchases
- Long-term funding needs
- When cheaper options available
- Already stretched financially
NZ Bridging Finance Providers
Banks (Limited Availability)
ANZ, ASB, BNZ, and Westpac offer bridging finance but with strict criteria. Best for existing customers with strong financials and clear exit strategy.
Rate: Per quote — banks typically price below non-bank lenders | Max LVR: Per lender; commercial bridging LVRs vary by security + exit certainty
Non-Bank Lenders
Resimac, Basecorp, First Mortgage Trust, and others offer more flexible bridging options with faster approval but higher rates.
Rate: Per quote — typically priced above bank pricing to compensate for faster approval + broader risk appetite | Max LVR: Per lender; non-bank LVRs vary by security + exit certainty
Alternatives to Bridging Finance
- Working Capital Loans: For business cash flow gaps (potentially cheaper)
- Commercial Property Loans: For longer-term property financing
- Bank Overdraft: For smaller, shorter-term needs
- Simultaneous Settlement: Coordinate sale and purchase on same day
- Extended Settlement: Negotiate longer settlement on purchase
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