How bridging works in Victoria
With bridging finance, a lender funds your new purchase while you still own your current property. It takes security over both, usually as registered mortgages recorded on the register kept by the Registrar of Titles. The total owed while you hold both properties is the peak debt. When your existing property sells, the proceeds pay down the loan to the end debt.
Bank bridging loans usually need you to show you can service the end debt from your income. Private bridging lenders lean more on the property values and the sale plan, and can help where income evidence is limited, though at a higher price.
Land transfer duty in Victoria
Victorian land transfer duty is collected by the State Revenue Office and is usually paid at settlement; penalty tax can apply if it is unpaid 30 days after settlement. A principal place of residence concession may reduce duty on homes within the published limits, provided you move in within 12 months, and first home buyers may have separate relief. Lenders seldom fund duty, so have the cash ready or include it in your plan. Estimate it on the Victorian stamp duty page.
Victoria also offers off-the-plan concessions in some cases, and duty on an off-the-plan contract can be calculated differently. Ask your conveyancer how it applies to your contract.
Selling in Melbourne and regional Victoria
The main bridging risk is a slow or lower-than-expected sale. Melbourne sale times vary between inner, middle and outer suburbs, and regional centres such as Geelong, Ballarat and Bendigo have their own patterns. Victoria's auction culture also matters: if your property passes in at auction, the sale period can stretch. Allow a buffer and assume a cautious price.
Typical scenarios in Victoria
Example only, not a real client. A family in Melbourne's south-east buy at auction on a Saturday before their own house is listed. A bridging loan settles the purchase, with their house going to auction six weeks later.
Example only, not a real client. A Ballarat couple are building a new home and need to move out of their current one before it sells. A private lender provides short bridging finance over both properties, with the sale proceeds as the exit.
Costs to compare
Ask each lender for written figures on:
- the interest rate during and after the bridging period;
- whether interest is added to the loan or paid monthly;
- establishment, valuation and legal fees;
- what happens to the end debt if your sale price is lower than expected;
- fees for extending the term.
Run your figures in the bridging calculator and compare total costs with the loan cost estimator.
Land tax on 31 December
Victorian land tax is assessed on the land you own at midnight on 31 December. If you own both properties on that date, land tax may apply to the one that is not your principal place of residence, depending on its value and the exemptions available. The SRO has rules for people moving between homes, so check them before your sale timing crosses year-end. See land tax in Victoria.
Commercial and investment property
If you are bridging between investment or commercial properties, Victoria's commercial and industrial property tax reform can affect your costs: a commercial or industrial property enters the new system through a qualifying transaction on or after 1 July 2024, and an annual tax then starts after a 10-year transition. Ask your lawyer how it affects your purchase and your exit sale.
Other ways to buy before you sell
You could negotiate a longer settlement, make the purchase subject to your sale, or use a short-term property finance facility. Read bridging finance explained for the national picture, and compare a caveat loan in Victoria if you only need a small sum, such as a deposit, for a few weeks.
Questions for a Victorian lender
- What peak debt and end debt will you lend against?
- How is interest charged while I own both properties?
- What happens if my property passes in at auction?
- Do you need my property listed before settlement?
- Are there fees for repaying early or extending?
Speak with a local professional before committing.