Bridging finance can be a practical short-term funding solution when a borrower needs to manage a timing gap between two property transactions. For brokers, the key is knowing how to present the deal so a lender can quickly understand the transaction, assess the risk, and make an informed decision.
So, how do you get bridging finance in New Zealand?
In simple terms, you need three things: enough equity, a clear repayment strategy, and the right supporting information. If those elements are clear, bridging finance can often move quickly. If they are unclear, the deal can stall before it gets properly assessed.
In our previous blogs we explored simple concepts like; what is a bridging loan, and how much does a bridging loan cost. This guide takes the last step to explore what lenders look for in a bridging loan application, how brokers and borrowers can package the information properly, and how to identify issues early before time is wasted.
To get bridging finance, a borrower generally needs to show:
• what the loan is being used for
• which property or properties will secure the loan
• how much equity is available
• how the loan will be repaid
• how long the bridge is needed for
• what could delay repayment
• whether the exit is already contracted or still dependent on a future event
A lender will usually assess the transaction based on the strength of the security, the borrower’s equity position, and the credibility of the exit strategy. For a closed bridge, the process is usually more straightforward because the borrower already has a binding sale agreement in place. For an open bridge, the lender needs more comfort because the repayment event has not yet happened.
For brokers, the goal is to make the lender’s assessment easy. A strong bridging loan submission should tell the full story upfront and not leave the lender to piece it together from attachments.
Bridging finance is not assessed in the same way as a standard mortgage or long-term investment loan. The lender is not only asking whether the borrower has income. They are asking whether the bridge can be repaid within the proposed term.
Most bridging applications come down to five key factors.
1. Loan Purpose
The lender needs to understand why the bridge is needed.
Common purposes include:
• buying a new property before the existing one settles
• settling a time-sensitive purchase
• refinancing an existing short-term facility
• bridging residual development stock
• releasing equity from one property to fund another transaction
• managing a timing gap between project completion and final settlements
The purpose should be clear and commercially sensible. If the lender cannot understand why the borrower needs the money, the application becomes harder to support, although this is true for all credit applications.
2. Equity
Equity is one of the first things a lender will assess. It gives the lender a buffer if the exit takes longer than expected or property values shift.
Equity may come from:
• the property being sold
• the property being purchased
• both properties together
• completed development stock
• additional property security
• cash contribution from the borrower
A strong equity position does not automatically approve a deal, but it gives the lender more confidence. A tight equity position may still work for a closed bridge with a strong exit, but it is harder to support if the exit is uncertain.
3. Exit Strategy
The exit strategy is the most important part of a bridging loan.
The lender needs to know how the loan will be repaid. This may be through:
• settlement of an unconditional sale
• sale of an existing property
• sale of completed development stock
• refinance to a long-term lender
• settlement of pre-sales
• release of funds from another confirmed transaction
A bridge without a credible exit is not a bridge. It is just short-term debt with no clear repayment pathway.
4. Security and Debt Position
The lender needs to understand what property security is available and what existing debt is already in place.
In some cases, the loan may be secured against one property. In other cases, the lender may need security across two or more properties to create enough equity buffer.
For brokers, this should be explained clearly in the submission:
• What is the property?
• Who owns it?
• What is it worth?
• What debt is already secured against it?
• Is it being sold, purchased, retained or refinanced?
• What position will the bridging lender hold?
If the security position is unclear, the deal slows down.
5. Realistic Loan Term
A bridging loan must have a realistic term.
Borrowers often want the shortest possible term to reduce interest cost. That is understandable, but a term that is too short can create pressure later. Extensions can be more expensive and harder to arrange if the borrower waits until the last minute.
Brokers should consider whether the loan term requested by the client is realistic before submitting the application. If a sale is the exit, is the property already under contract? If not, is it listed? Is the price realistic? If refinance is the exit, has a long-term lender assessed the borrower? If the exit depends on a development milestone, what still needs to happen?
Bridging finance is useful when the funding need is short-term, the security is clear, and the exit is realistic. The following examples show how this can apply in practice.
Case Studies
Closed Bridge – Purchase of a New Property
A borrower has found a new home and needs to settle in 30 days. Their existing home is already under contract, with settlement due 45 days later.
In this case, the bridging loan covers the timing gap between the purchase settlement and the sale settlement. The lender can assess the transaction quickly because the exit is known, the sale agreement is in place, and the repayment date is clear.
What are the key information requirements?
• sale and purchase agreement (ASP or S&P) for the new property
• sale and purchase agreement for the existing property
• current loan balance and historical loan statements
• expected net sale proceeds
• requested loan amount
• proposed settlement dates
• confirmation of security being offered
This is a typical closed bridge. The key risk is settlement timing, so the broker should make sure the loan term allows enough buffer.
Open Bridge — Investment Property Acquisition
An investor owns an unencumbered investment property and wants to purchase another property quickly. They intend to refinance with a bank once the purchase settles, but the bank process will not be completed in time.
A bridging loan may allow the investor to complete the purchase and then refinance into longer-term debt later.
What the lender will focus on:
• value of the security property
• purchase price of the new property
• borrower’s overall debt position
• likely refinance pathway
• timeframe required
• evidence that long-term refinance is realistic
This is not just about the asset value. The lender still needs to understand how the bridging loan will be repaid. If the refinance exit is not credible, the deal becomes weaker.
Open Bridge — Property Development Cash Flow Facility
A property developer has completed a six-unit townhouse project. Three units have settled, and three remain unsold. The developer wants to repay an existing development facility and release some equity to secure the next site.
A bridging loan may allow the developer to refinance the development loan facility and release enough equity to support the acquisition of the next development site.
What the broker should provide:
- sales schedule outlining security and expected sale price
- confirmation of title and CCC
- current loan balance and historical loan statements
- evidence of market demand, such as previous sales data or CMA reports from agents
- residual debt position after sale of the three townhouses
- sale and purchase agreement for the project being acquired
details of the next project.
If the sale proceeds are not sufficient to clear the debt in full, expect your lender to test the viability of the project based on the residual balance of the bridging loan.
This is a development-related bridge. It should not be presented as a simple property refinance. The lender needs to understand the current security position, saleability of the units, timing and repayment pathway.
Closed Bridge — Pathway to Titles and Code of Compliance
A townhouse project is nearly complete. The client has lodged for 224(c), which is being processed. Similarly, Final Inspection Pass has been achieved; however, CCC is yet to issue.
The project is pre-sold and settlements are due once the pre-sale agreements fall unconditional, which will occur on issuance of titles and code of compliance. The existing lender’s facility is maturing, but the final settlements are still a few months away.
While not a bridging loan in the traditional sense, a facility of this nature bridges the compliance gap many property developers face at the back end of a project. A refinance of the existing debt may reduce a developer’s holding cost as they work their way toward titles, code and, eventually, settlement of the pre-sales.
What the lender will want to understand:
- current project status
- project cost-to-complete, including whether any works or costs remain outstanding, or processing costs such as CCC uplift fees or development contributions
- compliance certificates, including evidence of Certificate of Acceptance (COA) for public infrastructure and Engineering Approval Completion Certificate (EACC)
- CCC status. The CCC lodgement pack is often the best source of information here, as it includes inspections plus supporting documentation such as producer statements, records of work and other sign-offs
- title issue timing
- pre-sale contracts
- settlement dates
- purchaser conditions
- loan balance and historical loan statements
This type of bridge can be a good fit where the exit is clear but timing has moved. However, the submission needs to show that repayment is genuinely pending, not speculative.
Common Roadblocks and Hurdles
Some bridging enquiries may not be ready to submit. Others are unlikely to be fundable without a major restructure. Brokers can save time by identifying common transaction attributes that may prevent a transaction from being funded.
- If the borrower cannot explain exactly how the loan will be repaid, the deal is unlikely to progress. “We will sell the property” is not enough. The lender needs to understand the likely sale price, expected timeframe, current marketing position and what happens if the sale takes longer than expected.
- If existing debt is too high at the initial refinance stage, there may not be enough security to provide for an additional equity release to enable the bridge. This is especially true for open bridge loans, where the repayment outcome is less certain and longer terms may be required.
- A borrower may believe their property is worth more than the market supports. If the bridging loan only works at an optimistic sale price, the lender will be cautious. Brokers should test value assumptions before submission. Comparable sales, agent appraisals, recent offers and valuation evidence can all help.
- If ownership is unclear, existing debt is not disclosed, or there are caveats, second mortgages or unresolved legal issues, the deal can slow down quickly. These matters should be disclosed early. Lenders do not like surprises late in the process.
- Unrealistic terms: a short term may reduce projected interest cost, but it can create problems if the exit takes longer. If the borrower realistically needs six months, do not package the deal as a three-month bridge just to make the numbers look better.
- If repayment depends on CCC, titles, pre-sale settlements, residual stock sales or a project refinance, say so upfront. Development-related bridging can be fundable, but the risks need to be presented clearly.
A strong broker submission reduces ambiguity. It helps the lender understand the deal quickly and focus on the actual credit decision.
Securing your bridging in loan
A practical structure to present a lending proposal is as follows:
- Transaction summary
- Borrower/sponsor background
- Loan request
- Security position
- Equity position
- Exit strategy
- Timing and urgency
- Key risks and mitigants
ASAP Finance assesses bridging finance through a practical property and credit lens. For development-related bridging, we also consider where the project sits in its lifecycle. A completed project waiting on settlements is different from a partially complete project with remaining construction risk. Understanding that difference is critical to structuring the right facility.
As a non-bank lender, ASAP Finance can often move quickly where the transaction is well-packaged and the exit strategy is clear. The more complete and commercially clear the submission, the faster the credit conversation can move.
If you have a bridging finance scenario that needs a quick, practical assessment, get in touch with the team at ASAP Finance.