Found Your Dream Home Already? Here's How to Buy Before You Sell
Wednesday, 15 July 2026
Buying your next home before you've sold? Here's what you need to know.
It's one of the most common situations many mortgage brokers help clients navigate, and it's easy to see why. The property you want might be available today, but your own sale could still be weeks or even months away. Trying to line up two settlements perfectly is rarely as straightforward as people hope.
In this article, we’ll explain how bridging finance works, when it can be a useful solution, and the factors you should consider before deciding if it's the right option for you.
What is Bridging Finance?
Bridging finance is a short-term lending solution that allows you to purchase your next home before the sale of your existing property has been completed.
Rather than relying on both settlements happening on exactly the same day, the loan temporarily covers the gap. Once your current home is sold, the proceeds are generally used to repay the bridging loan.
For many homeowners, this extra flexibility can remove a significant amount of stress during what is already a busy time.
It's Not Just About Getting Approved
While bridging finance can be a great tool, it isn't designed for every situation.
These loans are typically considered higher risk by lenders, which means they often come with higher interest rates, additional fees, and more detailed lending assessments than a standard home loan.
That doesn't automatically make them expensive or unsuitable. It simply means they need to be structured carefully so they genuinely improve your position rather than create unnecessary financial pressure.
The goal isn't just to make the numbers work today. It's to ensure they continue working until your current property is sold.
What Will a Lender Look At?
Every lender has slightly different criteria, but there are a few key areas they'll generally assess before approving bridging finance.
Strong equity in your existing property is usually important, as is having sufficient income to comfortably service the loan during the bridging period.
Lenders will also want confidence that your current home will sell within a reasonable timeframe. Having a realistic selling strategy and a contingency plan if the sale takes longer than expected can make a significant difference.
This is why good advice isn't simply about finding a lender that says yes. It's about making sure the overall lending structure suits your circumstances.
Understanding the Two Types of Bridging Finance
There are two main types of bridging finance, and understanding the difference is important.
- Closed Bridging: Closed bridging is generally considered the lower-risk option. You've already unconditionally sold your existing home and have a confirmed settlement date (hence the term ‘closed’ - there is a finite/defined period in which you need the money), but you need to complete the purchase of your new property before those funds become available. Since the repayment date is already known, lenders typically view this as the more straightforward scenario.
- Open Bridging: Open bridging applies when your current property hasn't unconditionally sold yet.Without a confirmed sale date, there is more uncertainty around when the loan will be repaid. As a result, lenders will usually assess these applications more carefully and may apply stricter lending criteria.This doesn't mean open bridging isn't possible. It simply requires more planning and a clear understanding of the risks involved.
Your Exit Strategy Matters
One of the biggest questions every lender will ask is simple.
How will this loan be repaid?
For most homeowners, the answer is to sell their existing property. In some situations, refinancing onto a standard home loan may also be an option.
Having a well-defined exit strategy provides confidence for both you and the lender. Without one, bridging finance can become far riskier than it needs to be.
Is Bridging Finance Right for You?
For the right borrower, bridging finance can be an excellent solution.
It can allow you to secure the home you really want without feeling pressured to accept the first offer on your existing property. It may also help you avoid moving into temporary accommodation while you wait for settlement.
Like any financial strategy, though, it needs to be considered carefully. If it's not structured correctly, the additional costs and financial commitments can outweigh the benefits.
Final Thoughts
Bridging finance isn't simply about whether you can buy before you sell. It's about whether doing so makes financial sense and whether the loan has been structured to support your long-term goals.
Every property transaction is different, and the right approach depends on your equity, income, timing, and overall plans.
If you're thinking about buying your next home before selling your current one, having an early conversation can help you understand your options and avoid unnecessary surprises. The right advice at the beginning can often make the entire process much smoother.
If you would like to have a no-obligation chat about bridging finance, the team at Kris Pedersen Mortgages are more than happy to help and provide market leading mortgage advice. Please contact them at info@krispedersen.co.nz or call the office at (09) 486 4719 for a no-obligation chat.
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