1. Purpose: Bridging finance is typically used when the borrower wants to buy a new property before selling their existing one. It helps cover the down payment or full purchase price of the new property while waiting for the funds from the sale of the old property.

2. Two Types: There are generally two types of bridging loans:

   • Closed Bridging Loan: This is for borrowers with a definite settlement date on the sale of their existing property and the purchase of the new one.

   • Open Bridging Loan: This type is used when the settlement date of the existing property is uncertain. It offers more flexibility but might come with higher interest rates.

3. Short-Term Nature: Bridging loans are short-term loans, usually ranging from a few months to a couple of years. The repayment term can be as short as six months or as long as 24 months, depending on the lender and the borrower's circumstances.

4. Higher Interest Rates: Interest rates on bridging loans are typically higher than standard home loans due to the short-term nature and the higher risk associated with uncertain sale timelines.

5. Flexible Payments: In some cases, borrowers may have the option to make interest-only payments during the bridging period. This helps reduce the financial burden until the property is sold, and the loan can be repaid.

6. Loan Amount: The loan amount available through bridging finance is based on the equity in the existing property and the potential equity in the new property being purchased.

7. Loan Approval Criteria: Lenders assess the borrower's ability to manage both loans, factoring in the future sale price of the existing property and the potential settlement date. 

8. Risks: The primary risk is if the existing property doesn't sell within the expected timeframe. Borrowers might face increased interest charges or need to secure alternative financing. If the property fails to sell, there could be challenges in repaying the loan.

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