A Guide to Open Bridging Finance in New Zealand: What You Should Know
March 10, 2025 at 2:24 PM
What is Open and Closed Bridging Finance?
There are two types of bridging finance
Closed Bridging Loans
Where you have a confirmed sale date for your existing home which is later than the property you wish to purchase.
Example: You have signed a sale agreement on your current home and the settlement is two months after the settlement of the property you wish to purchase. You need funds to complete the purchase of your new home before receiving proceeds from your sale. A closed bridging loan covers this short period until settlement.
Open Bridging Loans
Where the sale of your current home is not yet finalised but the property you wish to purchase is confirmed.
Example: You find your dream home but haven’t secured a buyer for your existing property. Open bridging finance allows you to buy now and repay the loan once your current home sells.
Today we’ll focus on open bridging finance, including its advantages, risks, and how to determine if it’s the right option for you.
What is Open Bridging Finance?
An open bridging loan is a temporary form of finance that allows you to purchase a new home before your existing property has been sold. Unlike closed bridging finance, there’s no set timeframe for repaying the loan, but lenders typically expect this to occur within 6-12 months.
This type of finance can be useful for homeowners who:
✔️ Have found their dream home but haven’t yet sold their current property.
✔️ Are confident their existing home will sell but need temporary funds.
✔️ Want to buy in a fast-moving market without missing out on opportunities.
However, open bridging finance comes with higher risks since there’s no guaranteed sale of your current property, making it a less predictable option.
Advantages of Open Bridging Finance
✅ Flexibility – You don’t need to rush the sale of your current property, allowing you to wait for the right offer.
✅ Convenience – Enables a seamless transition between homes without the need for renting or temporary accommodation.
✅ Fast Property Purchase – Lets you act quickly in a competitive property market without waiting for your home to sell.
Risks & Considerations
❌ Higher Costs – Interest rates are usually higher, and if your home takes longer to sell, costs can add up.
❌ No Guaranteed Sale – If your property doesn’t sell as expected, you may face financial strain.
❌ Lender Conditions – Not all lenders offer open bridging finance, and those that do may impose strict conditions.
To reduce risk, it’s important to have a backup plan, such as a strong marketing strategy for selling your home or access to other financial resources if your property remains unsold.
Is Open Bridging Finance Right for You?
Open bridging finance can be a helpful tool for homeowners needing flexibility, but it’s not the right fit for everyone. It’s best suited for those who:
✔️ Have strong equity in their current property.
✔️ Are confident in their home’s marketability.
✔️ Can afford potential higher interest payments.
Speaking to a mortgage adviser can help you assess whether bridging finance aligns with your financial situation and explore alternative solutions.
Get Expert Advice on Bridging Finance
If you’re considering open bridging finance, it’s essential to have the right guidance. As mortgage advisers, we can help you:
- Assess your financial position and eligibility.
- Compare bridging loan options from different lenders.
- Develop a strategy to reduce financial risk.
Get in touch today to explore your bridging finance options and ensure a smooth transition to your new home.
Disclaimer: The information provided in this article is for general informational purposes only and should not be considered personalised financial advice. Every financial situation is unique, and bridging finance may not be suitable for everyone. We strongly recommend speaking with a trusted mortgage adviser to assess your specific needs and explore the best loan options for your circumstances.