Running a concreting business means you understand cash flow timing better than most.
A bridging loan covers the gap when you've found your next property but haven't sold your current one yet. For concreters juggling construction timelines and wanting to upgrade without the rush of selling first, this type of short term property finance can solve the problem of being stuck between properties. The catch is understanding what it actually costs and whether your situation justifies the expense.
What Makes Bridging Finance Different from Standard Construction Loans
Bridging finance is a short term loan that uses your existing property as security while you buy or build your next one. Unlike a construction loan that funds the build itself, a bridging loan addresses the overlap period when you own two properties simultaneously. You're paying interest on both your existing mortgage and the bridging loan until you sell and settle on your current place.
Consider a concreter who's found a house and land package in the growth corridor but hasn't sold their current home in the western suburbs. The standard construction loan won't solve the deposit problem because their equity is locked in the existing property. A bridging loan releases that equity immediately, letting them proceed with the purchase and build without waiting for a sale. Once the old property sells, the bridging loan gets paid out and disappears.
The bridging loan term typically runs six to twelve months, which gives you breathing room to sell without discounting heavily or rushing through an auction. If construction delays push your timeline out, most lenders will extend for another few months, though that comes with additional costs.
How Interest Capitalisation Works When You're Building
Most bridging loans use capitalised interest, meaning the interest gets added to the loan balance each month rather than requiring cash payments. For tradies managing variable income from project work, this removes the pressure of servicing two mortgages out of pocket during the bridging period.
The lender calculates interest daily on the outstanding bridging loan amount and adds it to your balance monthly. If you've borrowed $200,000 as a bridge and the variable interest rate sits around 7-8%, you're adding roughly $1,200-$1,400 per month to the loan. Over a six month bridging period, that compounds to about $7,500-$8,500 in total interest costs. That number climbs if construction runs longer than planned or if you can't settle the sale of your existing property on schedule.
This is where your exit strategy matters. If your current property is priced correctly and genuinely saleable within six months, the capitalised interest represents a known cost. If you're hoping for a price that requires the perfect buyer and ideal conditions, you're gambling on how long that bridging finance costs you.
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The LVR Calculation Across Two Properties
Lenders assess bridging loan LVR differently than standard home loans. They look at the combined loan to value ratio across both properties, factoring in your existing mortgage, the new purchase price, and estimated construction costs.
In a scenario where you owe $350,000 on your current home valued at $650,000 and want to buy land for $280,000 with a construction build of $420,000, the numbers stack up like this. Your total debt would be $1,050,000 secured against total property value of $1,350,000 once the new build completes. That's roughly 78% LVR, which most lenders will write without requiring you to sell first.
The problem comes if your existing property value has dropped since you bought it or if construction costs blow out mid-build. Lenders typically lend against 80-85% combined LVR for bridging loans for tradies, so you need genuine equity in your current place. If you're sitting at 90% LVR already, bridging won't work until you pay down the existing loan or wait for capital growth.
When Quick Bridging Finance Justifies the Cost
Bridging makes sense when selling first would cost you more than the bridging finance costs. For concreters who've secured work in a new area and need to relocate without disrupting projects, or who've found a property in a tight market where stock doesn't last, the premium buys you control over timing.
The alternative is selling your current home, moving into a rental, and hoping you find something suitable before rental costs and storage fees add up. If you're looking at $600-$800 per week in rent for six months, that's $15,600-$20,800 out of pocket anyway, plus the inconvenience of moving twice and storing your tools and equipment.
Bridging finance also removes the pressure to accept a low offer on your existing property just to meet a settlement deadline. If your home is worth $650,000 but you're forced to take $620,000 because you've already exchanged contracts on the new place, that $30,000 loss outweighs any bridging loan fees several times over.
The Application Process and Approval Timeline
A bridging loan application requires proof of your ability to service both loans if the sale takes longer than expected, plus a realistic exit strategy. Lenders want to see your current property listed with an agent and priced according to recent comparable sales, not your optimistic valuation.
For self-employed concreters, that means recent tax returns, BAS statements, and evidence of ongoing contracts. The approval timeline typically runs two to three weeks if your financials are solid and the property valuations support the LVR. Fast approval happens when you're upfront about your cash flow, have clear documentation, and aren't trying to stretch the numbers.
Bridging loan settlement can occur quickly once approved, which matters when you're competing for property in areas where other buyers are moving fast. The application needs to show you can carry both properties for the full 12 month bridging loan term even if the sale takes longer than planned.
Call one of our team or book an appointment at a time that works for you. We'll run the numbers on whether bridging finance makes sense for your situation or whether you're better off waiting until you've sold.
Frequently Asked Questions
How does capitalised interest work on a bridging loan during construction?
Capitalised interest gets added to your loan balance each month instead of requiring cash payments. On a $200,000 bridge at 7-8% rates, you'll add roughly $1,200-$1,400 monthly, totalling about $7,500-$8,500 over six months.
What LVR do lenders allow for bridging finance across two properties?
Most lenders will approve bridging loans up to 80-85% combined LVR across both your existing property and the new purchase. You need genuine equity in your current home, as lenders won't typically bridge if you're already sitting above 90% LVR.
How long does bridging loan approval take for self-employed concreters?
Approval typically takes two to three weeks with solid financials and property valuations that support your LVR. You'll need recent tax returns, BAS statements, and evidence of ongoing work to demonstrate you can service both loans if the sale takes longer than planned.
When does bridging finance cost less than selling first?
Bridging makes financial sense when selling under pressure would force you to accept a low offer that exceeds the bridging costs. A $30,000 discount to meet a deadline will outweigh typical bridging fees and capitalised interest over six to twelve months.
What's the typical term for a bridging loan when building?
Bridging loan terms typically run six to twelve months, giving you time to sell your existing property without rushing. Most lenders will extend for a few additional months if construction delays occur, though this adds to your total costs.
