Bridging Loan Alternatives in Australia (2026): The Six Ways to Buy Before You Sell
Six ways to close the gap between the home you are buying and the home you are selling. Only one of them is a bridging loan, and the full bridging mechanics live in our complete guide.
You have six realistic ways to buy your next home before your current one sells: a bridging loan, a deposit bond, a subject to sale offer, a negotiated longer settlement, selling first and renting briefly, or a second facility against your equity. The right one depends on your equity, your timing and your appetite for risk.
- Bridging is a tool, not a default. It funds both homes at once for a defined window, and it earns its keep when you have found the home and refuse to lose it.
- A deposit bond solves a different, smaller problem: it stands in for the cash deposit when your equity is locked inside an unsold home, for a small one-off premium rather than interest.
- Subject to sale offers and longer settlements cost negotiating power instead of interest. They work with patient vendors in quiet campaigns, and a subject to sale condition is generally impossible at auction.
- Selling first buys certainty and pays for it in a double move. A second facility against your equity suits strong borrowers, especially those planning to keep the current home.
Most articles on this topic list two or three options and stop. That leaves out the ones that are frequently the right answer, so this guide covers all six, with a decision matrix up front and the honest catch attached to each. Everstone Finance structures the timing gap between homes every week, sometimes with bridging finance and often without it, and the pattern behind the right choice is remarkably consistent. It is not about which product is best. It is about which problem you actually have.
- The decision matrix: six options, one table
- How does a bridging loan actually work?
- What is a deposit bond and when does it beat bridging?
- What is a subject to sale offer?
- Can you simply negotiate a longer settlement?
- Is selling first and renting worth the double move?
- Can a second facility against your equity do the job?
- Which one fits your situation?
- Where bridging still wins
- Frequently asked questions
The decision matrix: six options, one table
The six ways to buy before you sell each trade a different resource: bridging spends interest on a combined debt, a deposit bond spends a small premium, subject to sale offers and longer settlements spend negotiating power, selling first spends a double move, and a second equity facility spends serviceability. Match the cost you can most afford to carry.
| Option | What it is | Best when | The catch | Cost character |
|---|---|---|---|---|
| Bridging loan | A short-term loan that funds both homes at once while yours sells | You have found the home, equity is strong and the sale plan is real | The combined debt accrues interest until the old home sells | Interest on peak debt |
| Deposit bond | A guarantee that stands in for the cash deposit at exchange | Your equity is locked in an unsold home and only the deposit is the gap | It does not fund the purchase, settlement money must still arrive | Small one-off premium |
| Subject to sale offer | A purchase contract conditional on your own home selling | Private sale, patient vendor, little competition for the property | The weakest offer on the table, and generally impossible at auction | Negotiating power cost |
| Longer settlement | A settlement date pushed out by agreement to give your sale time | The vendor values certainty more than speed | You usually pay for the time in price or terms, and the date is still fixed | Negotiating power cost |
| Sell first, rent briefly | Sell, bank the result, then buy from a position of total certainty | A slow market where you would rather hold cash than carry two debts | Two moves, rent in between, and prices can shift while you wait | Double-move cost |
| Second equity facility | A separate loan against your current home that funds the next deposit | Strong equity and income, or you plan to keep the current home | You must service both loans in full from day one | Interest on two loans |
Cost characters are deliberately qualitative. What each option costs in dollars depends on your prices, your timing and your lender, which is a modelling exercise, not a table entry.
How does a bridging loan actually work?
A bridging loan finances your current home and your next one at the same time for a defined window, usually six to twelve months, typically at up to 80 per cent LVR across both properties. Interest is usually capitalised onto the balance, so nothing leaves your pocket during the bridge, and the sale of your old home clears the debt down to a normal mortgage.
Bridging is the benchmark the other five options get measured against, so it goes first. The lender takes security over both properties and works with two numbers: peak debt, everything you owe while you hold both homes, and end debt, the normal mortgage that remains once the old home sells. During the bridge the interest is usually capitalised, meaning it is added to the balance rather than billed monthly, and terms usually run six to twelve months at up to 80 per cent LVR across both properties. The full mechanics, worked examples included, are in our complete guide to bridging loans.
The honest catch is the shape of the cost: you pay interest on the peak debt, the biggest number in the transaction, for as long as the bridge runs. A well planned bridge keeps that window short. A stale listing stretches it. That is why the product rewards people with realistic sale expectations and punishes optimism, and it is why the fees and interest deserve their own line by line treatment, which they get in our guide to bridging loan costs.
What is a deposit bond and when does it beat bridging?
A deposit bond is a guarantee that takes the place of the cash deposit when you exchange contracts. No money changes hands on the day: the issuer promises to pay the vendor if you fail to complete, and you settle the full price as normal. It suits buyers whose equity is locked inside an unsold home, for a small one-off premium.
The deposit bond is the most underused tool on this list, mostly because people assume their problem is the whole purchase when it is often just the deposit. Picture the common case: you have sold, or you are certain to sell, and the money is coming, but exchange is this week and your cash is locked inside the house you have not settled yet. A bridging loan can solve that, but it is a large instrument for a small gap.
A deposit bond solves exactly that gap. The issuer gives the vendor a guarantee in place of the cash deposit. If you complete the purchase, the bond simply expires and the deposit forms part of the money you hand over at settlement. If you fail to complete, the issuer pays the vendor the deposit and recovers it from you. The cost is a small one-off premium rather than interest on a combined debt, which is why, when the deposit really is the only gap, the bond usually wins on cost character alone.
The limits matter just as much. A bond funds nothing: the entire purchase price must still arrive at settlement from your sale, your loan or both, so it only works when that settlement money is genuinely coming. And acceptance is the vendor’s choice, so the bond needs to be raised with the agent before you offer, not after.
What is a subject to sale offer?
A subject to sale offer makes your purchase conditional on your own home selling, usually within an agreed period. It removes the risk of owning two homes, and it pays for that safety with negotiating power: vendors discount conditional offers, often keep marketing the property, and at auction the option is generally impossible because auction contracts are unconditional.
This is the option that costs no interest and no premium, which is exactly why it costs something else. When you offer subject to sale, you are asking the vendor to carry your timing risk. In a hot campaign with three clean offers on the table, yours is the one that gets discarded. In a quiet campaign with a motivated vendor, it can genuinely work, especially when your own home is realistically priced and already on the market.
Even when a vendor accepts, read the conditions. Many subject to sale contracts include a clause allowing the vendor to keep marketing the property, and if a better buyer appears you are given a short window to go unconditional or step aside. That turns your safety net into a countdown. It is still a legitimate structure, but it behaves less like certainty and more like a reserved seat that someone else can bump you from.
The hard boundary is the auction room. Auction contracts exchange unconditionally on the day, so a subject to sale condition is generally impossible at auction. If your target suburb trades mainly under the hammer, this option is effectively off your list, and the comparison shifts to bridging finance or a deposit bond arranged before auction day. How the two sale methods change your negotiating position is covered in our private sale versus auction guide.
Can you simply negotiate a longer settlement?
Yes, and it is often the simplest fix: you agree a later settlement date on the purchase, buying time for your own sale to complete. It costs no interest and no premium, but the time is usually paid for in price or terms, and the settlement date is still fixed, so a sale that misses the window recreates the original problem.
A longer settlement is the quiet achiever of this list. Nothing new is borrowed and nothing is guaranteed by a third party. You simply ask the vendor for more runway, and vendors who are not in a hurry, or who want a certain, unconditional buyer more than a fast one, will often trade time for certainty. That trade is the point: an unconditional offer with a longer settlement is far stronger than a subject to sale offer, because the vendor keeps the certainty and you keep the time.
Two catches. First, time is rarely free: a vendor granting a long settlement usually expects something in return, in price, in deposit size or in terms, so you spend negotiating power rather than interest. Second, the date you negotiate is still a hard date. If your sale campaign runs long, the extended settlement arrives with exactly the same pressure as a short one, just later. That is why long settlements pair so naturally with a deposit bond on the purchase, and why the sequencing conversation belongs before the offer, not after, something our step by step buying guide walks through.
Six options, one right structure. Map yours before you offer.
Tell us what you own, what you owe and what you are trying to buy, and we will map which of the six structures actually fits, with the numbers modelled properly. No cost, no obligation.
Book a chat with a former bankerIs selling first and renting worth the double move?
Selling first converts your equity to cash, locks your budget and makes you an unconditional buyer, at the price of moving twice and renting in between. In a soft market the maths often favours it, because your sale price is locked while your purchase happens later into the softness. Rent back arrangements can sometimes remove the second move entirely.
Selling first is the option the finance industry talks about least, because there is no product in it. It is also, for a meaningful share of movers, the right answer. Sell, settle, bank the proceeds, and you now know your budget to the dollar, carry no overlap debt, and negotiate on your next purchase as the cleanest buyer in the room. In the current market that logic has extra weight: our piece on why a falling market favours upgraders shows how a locked sale price and a later purchase can work in your favour.
The cost is the double move: two sets of removalists, a rental in between, and the friction of living out of boxes while you search. There is also market risk in both directions, because prices can move while you rent. Two variations soften it. A rent back arrangement, where you sell and lease your own home back from the buyer for an agreed period, removes the second move and keeps you in place while you hunt. And a short-term furnished rental, unglamorous as it is, converts the scariest version of the timing problem into a known, capped cost, which is precisely the certainty the other five options are trying to buy.
Can a second facility against your equity do the job?
If your equity and income are strong, a lender can approve a separate facility against your current home to fund the deposit on the next one, with a standard loan on the new purchase. Unlike bridging there is no forced sale deadline, but you must service both loans in full from day one, which makes serviceability the gatekeeper.
This is the structure people reach for when the word bridging makes them flinch, and in the right hands it is elegant. You draw a second facility against the equity in your current home, use it as the deposit on the new purchase, and take a standard mortgage for the rest. Nothing is capitalised and nothing has a bridge deadline attached. You sell the old home whenever it suits, and some borrowers never sell at all, converting the old home into an investment property instead.
The gatekeeper is serviceability. The lender assesses you on carrying both loans in full, at assessment rates, without relying on a future sale. That is a high bar, and it is the honest reason this option belongs to strong borrowers: it asks your income to do the work that a bridging lender lets the sale proceeds do. When it fits, it is the most flexible structure on this list. When it does not, forcing it means overstretching, which no timing convenience is worth.
Which one fits your situation?
Match the option to the actual gap: bridging when you have found the home and need both funded, a deposit bond when only the deposit is locked away, subject to sale or a longer settlement when the vendor is patient, selling first when certainty matters most, and a second facility when your income can carry both loans.
The six options stop being confusing the moment you name your actual situation. These are the patterns we see most:
| Your situation | Usually the strongest fit | Why |
|---|---|---|
| Found the next home, current home not yet listed, strong equity | Bridging loan | Both homes need funding and the window needs to be defined |
| Already sold on a long settlement, only the deposit is the gap | Deposit bond | The money is coming, so a guarantee beats new debt |
| Buying at auction | Bridging, or a deposit bond agreed before auction day | Subject to sale is generally impossible under the hammer |
| Slow market, no urgency, allergic to carrying two debts | Sell first, rent briefly | Certainty is cheap when nothing is running away from you |
| Private sale, motivated vendor, little competition | Subject to sale offer or a longer settlement | Quiet campaigns are where negotiating power buys time |
| Strong income, planning to keep the current home | Second equity facility | No sale means no bridge, so both loans simply need servicing |
The decision logic in one sentence. According to Everstone Finance, the choice between a bridging loan and its alternatives comes down to three questions: how much equity you hold, how certain your sale is, and whether you can carry two properties at once. Buyers who answer those three questions honestly almost always land on the right structure quickly.
Notice what the table does not ask: which option is cheapest in the abstract. That question has no answer. Each structure spends a different currency, interest, premium, negotiating power, convenience or serviceability, and the cheap option is the one spending the currency you have the most of.
Where bridging still wins
Bridging remains the strongest tool when you have found the right home and cannot wait, when the whole purchase needs funding rather than just the deposit, and when making no repayments during the changeover matters. It turns you into an unconditional buyer without selling first, which none of the cheaper alternatives fully replicate.
This article exists to widen the menu, not to talk you out of bridging, so here is the honest case back the other way. Every alternative on this list gives something up. The deposit bond does not fund the purchase. The subject to sale offer weakens your hand. The longer settlement still has a hard date. Selling first costs a double move. The second facility demands income most households do not have spare.
Bridging is the only option that funds both properties in full, keeps you unconditional, requires no vendor cooperation, and usually asks for no repayments while the changeover runs. When the home on the table is the one you actually want, and the equity and sale plan are real, paying interest on peak debt for a defined window is often the best money in the whole transaction. That case, with worked examples and every cost itemised, is made in our complete bridging loans guide.
Frequently asked questions
What is the main alternative to a bridging loan?
There is no single substitute, there are five: a deposit bond, a subject to sale offer, a negotiated longer settlement, selling first and renting while you buy, and a second loan facility against your equity. Which one fits depends on how much equity you hold, how certain your sale is, and whether you can carry two properties at once.
What is the cheapest alternative to a bridging loan?
It depends on what the timing gap really is. If the only problem is the cash deposit, a deposit bond is usually the smallest outlay, a small one-off premium rather than interest on a large combined debt. If you can tolerate moving twice, selling first avoids overlap interest entirely, but you pay in removalists, rent and the risk that prices move while you wait.
Can I use a deposit bond at an auction?
Often, but only with preparation. Some vendors accept a deposit bond in place of the cheque on auction day, and acceptance is at the vendor’s discretion, so it must be agreed with the agent before you bid. A subject to sale condition, by contrast, is generally impossible at auction because auction contracts are unconditional.
Do vendors actually accept subject to sale offers?
Some do, usually in slower markets where offers are scarce, and often with a clause that lets them keep marketing the property and force your hand if a better buyer appears. In a competitive campaign a subject to sale offer is usually the first one discarded, which is exactly the negotiating cost to weigh against bridging.
Is a deposit bond the same as borrowing the deposit?
No. A deposit bond is a guarantee, not a loan: no money changes hands at exchange, and the issuer only pays the vendor if you fail to complete. You still need to deliver the full purchase price at settlement, which usually comes from the sale of your existing home, your new loan, or both.
Can these options be combined?
Yes, and good structures often do. A deposit bond frequently pairs with a longer settlement, one covers the deposit while the other buys time for your sale. Selling first can pair with a short bridging loan if the right home appears mid campaign. Mapping the combination is exactly what a broker does before anything is signed.
The honest summary
The gap between buying and selling is a timing problem, and timing problems have more than one solution. Bridging finance is the most complete of the six and the most expensive in interest. The deposit bond is the cheapest and solves only the deposit. The negotiated options, subject to sale and longer settlement, are free in dollars and paid for in leverage. Selling first buys certainty with inconvenience, and the second facility buys flexibility with serviceability. None of them is right in general. One of them is usually clearly right for you, and it is knowable in one conversation, with the numbers modelled instead of guessed.
Buying before you sell? Get the structure right first.
A former banker will map your equity, your timeline and all six structures against your actual numbers, and tell you plainly which one fits. One conversation, no cost, no obligation.
Book a chat with a former bankerAbout the author. Ahmed Lotfi is co-founder of Everstone Finance and a former banker who now works as a mortgage and finance broker in South Yarra, Melbourne, arranging home, investment and commercial lending for clients across Australia. Everstone Finance operates under the Best Interests Duty as Credit Representative 574314 of LMG Broker Services Pty Ltd, Australian Credit Licence 517921.