Guide · Moving home Bridging loan vs selling first
When you’re moving from one home to the next, there are two ways to do it. Sell first and know your budget, or buy first with a bridging loan and move once. Here’s what each one costs, what can go wrong, and who each tends to suit.
Key takeaways
- Selling first is usually cheaper and lower risk: you know your budget before you buy.
- Buying first with a bridging loan costs interest. In the example, about $66,879 over six months.
- Selling first has its own costs: about $23,400 of rent over six months at $900 a week, and two moves.
- The real risk in buying first is the sale. At 10% below the expected price, about $117,000 more stays on your new loan.
Side by side
Moving from a $1.2 million home with $400,000 owing to a $1.3 million home in NSW.
| Buy first, with a bridging loan | Sell first, then buy | |
|---|---|---|
| Extra cost | About $66,879 of interest over 6 months, added to the loan | About $23,400 of rent over 6 months, two moves, maybe storage |
| Your budget | Based on an expected sale price | Known, because the sale has settled |
| Main risk | A lower or slower sale. At 10% less, about $117,000 more debt stays | Not finding the right home in time |
| Moves | One | Two, with a rental in between |
| Peak debt | $1,822,666, secured by both homes | Only the new loan |
| Loan after it’s done | About $652,666, if the sale goes to plan | Similar, without the bridging interest |
Illustrative. Sale at $1.2 million less 2.5% selling costs; new home with $52,787 NSW stamp duty and $3,000 other costs; 7.5% bridging rate with interest added; rent at $900 a week. Not a quote or an offer.
When buying first tends to suit
- You have strong equity, so peak debt sits well under the lender’s limit.
- You’ve found a home that’s hard to replace.
- Your home is in demand and likely to sell within months.
- Moving twice would be hard: school terms, a business, family.
See bridging loans for how lenders assess it.
When selling first tends to suit
- Your equity is thinner, or the end loan would stretch your income.
- Your home’s price is hard to predict, or sales are slow.
- You want a fixed budget before you look.
- A short rental is easy to find where you are.
Selling first doesn’t mean losing your place in the market. A pre-approval for your next loan, ready before your sale settles, keeps you moving.
FAQ Questions clients ask
Is it better to buy first or sell first?
Selling first is usually cheaper and lower risk, because you know exactly what you have to spend. Buying first with a bridging loan costs more in interest, but means you don’t miss the right home or move twice. It depends on your equity, your market and how much uncertainty you can live with.
How much does a bridging loan cost?
In the example on this page, about $66,879 of interest over six months, added to the loan, plus the usual lender fees. A longer sale costs more. Selling first instead might cost about $23,400 in rent over the same six months, plus two moves.
What is the risk with a bridging loan?
That your home sells for less, or later, than you planned. A lower price leaves more debt on the new home, and a longer sale adds interest. That’s why I test a lower sale price before you commit.
What is the risk with selling first?
That you don’t find the right home in time, and end up renting longer, moving twice, or rushing a purchase. You also have to find a rental that fits your timeline.
Read next
Get your real number in one 30-minute session.
Then start again at your pace.
So you could stop moving and start settling.