Bridging finance in NZ: how bridging loans work

What bridging finance is

Bridging finance is a short-term loan that covers the gap between buying your next home and selling the one you live in now. Without it, you need the money from your sale before you can pay for your purchase, so the two settlement dates have to line up. A bridging loan lets you buy first and sell afterwards.

While you have a bridging loan, you keep paying your existing mortgage as normal. The bridging loan is usually interest-only, so you pay just the interest each month. When your current home sells, the money from the sale pays off what you owe on it, and anything left over usually goes toward the new loan.

Open and closed bridging loans

A closed bridge means your current home has already sold unconditionally and you know the settlement date. You only need the loan for the time between settlements, so banks see this as low risk.

An open bridge is when you buy before selling your current home. Because it's not certain how long your house will take to sell or what price you'll get, banks are more careful. BNZ says banks usually set up an open bridge for six months or until your house sells, whichever comes first.

What bridging finance costs

Bridging loans usually have a floating rate, which is higher than a fixed rate. In November 2026, floating rates at the main banks ranged from 6.25% at Kiwibank to 6.39% at Westpac. The average 1-year special rate at the end of October 2026 was 4.95%.

For example, if you buy a house at the national median price of $784,363 and borrow the full amount as a bridging loan at 6.29% (the floating rate at ANZ and ASB), you'd pay about $4,111 in interest each month. If your current home took six months to sell, you'd pay about $24,700 in interest on top of your existing mortgage payments.

You'll also need to pay legal fees for both selling and buying, and the bank may ask for a registered valuation of your current home.

What banks look for

Before approving a bridging loan, banks want to make sure you can cope if things don't go as planned. BNZ says banks look for:

• enough money to cover the repayments on all your loans
• a realistic idea of what your home will sell for
• a real estate appraisal showing what similar homes are selling for
• a plan B if your home sells for less, such as savings
• possibly a registered valuation of your current home.

Bridging finance is exempt from the Reserve Bank's loan-to-value ratio and debt-to-income rules, so a bridging loan doesn't count toward the limits on low-deposit or high-DTI lending. Each bank still uses its own lending criteria.

What the main banks offer

None of the main banks list a separate bridging rate on their websites. Each bank decides on bridging loans individually.

• ANZ offers a short-term, interest-only bridging loan if your new home settles before your current one. You'll need to show you can afford both loans at once.
• ASB offers interest-only bridging loans. ASB can also let you keep your existing loan and use your new home as security, which may help you avoid break fees if you're partway through a fixed term.
• BNZ usually sets up an open bridge for up to six months or until your home sells, with some or all of the loan on interest-only terms.
• Westpac can increase your Choices Home Loan for a short time or arrange bridging finance, which it describes as a short-term, interest-only loan.
• Kiwibank offers bridging loans. You keep paying your current home loan as usual and pay the bridging loan on the new property. Its next home calculator can help you see if you could afford both.

The risks

The biggest risk is your house taking longer to sell than you expected. Each extra month adds more interest, and if your home hasn't sold by the end of the bridging period, you might have to pay full repayments on two mortgages.

Another risk is selling for less than you hoped. The shortfall stays as debt, and the bank might not lend you more to cover it. Settled.govt.nz warns you could end up with a bigger home loan than you planned.

Other ways to buy and sell

• Sell first, then buy. You might need to rent for a while, but you'll know exactly how much you have to spend.
• Make your offer conditional on selling your current home. Vendors usually prefer offers without this condition, so it can make your offer less attractive, especially in a deadline sale.
• Ask for a longer settlement date so you have more time to sell.
• If you've already sold, a closed bridge for a few weeks usually costs much less than an open one.

How a mortgage adviser can help

Each bank decides on bridging finance individually, so it's worth comparing your options. A mortgage adviser can tell you which banks are likely to approve your bridge and how to set it up so you avoid break fees on your current loan. Use the borrowing calculator to see how much you could borrow once your current home sells.

Common questions