What are the main exit strategies for a bridging loan?
Three: (1) Sale exit — repay from the sale of an existing property; (2) Refinance exit — roll the bridge into a long-term bank loan once income or valuation supports it; (3) Hybrid exit — partial sale plus refinance of the retained asset. Sale is the most common in Melbourne; hybrid is the safest when timing is uncertain.
The three exits compared
| Factor | Sale exit | Refinance exit | Hybrid exit |
|---|---|---|---|
| Typical timeline | 30 – 180 days | 60 – 180 days | 60 – 270 days |
| Lender comfort | Highest | Medium | High (if both documented) |
| Best for | Existing home sold or under contract | Income/security recovers | Partial sale + retained asset |
| Main risk | Sale falls over or undersells | Refi declined or delayed | One leg fails — other must cover |
| Evidence required | Contract of sale, agent appraisal | Bank pre-approval, tax returns | Both of the above |
Sale exit — the default in Melbourne
Most bridging loans in Brighton, Toorak, and Malvern are repaid from the sale of the existing family home. Lenders want to see a realistic agent appraisal, a marketing plan, and ideally a contract of sale before settlement of the bridge. The cleaner the evidence, the lower the rate and the higher the LVR they'll allow.
The risk is timing. If the existing home sits on market for 90+ days, you'll burn through interest and may face an extension fee. We always model two scenarios — a fast sale at market and a slow sale 10% under appraisal — so you know your worst-case cost before you commit.
Refinance exit — when income or valuation will catch up
Refinance exits suit borrowers who don't need to sell but currently can't service a bank loan: self-employed buyers waiting on tax returns, developers waiting on a completed valuation, or owners restructuring debt. The plan is to refinance the bridge into a standard mortgage or commercial facility within 6–12 months.
Lenders need to believe the refinance will actually happen. Bring a bank pre-assessment, projected tax returns, or a valuation feasibility — not just a hope. Without evidence, expect higher rates and shorter terms.
Hybrid exit — partial sale plus refinance
Hybrids are common for downsizers and small developers. Sell one asset to repay 60–70% of the bridge, then refinance the residual against the retained property. This spreads the risk across two independent exit events — if one is delayed, the other usually still works.
Lenders favour hybrids when the sale property is liquid (apartment, established house) and the retained asset clearly services the residual loan. Document both legs from day one.
How we stress-test every exit
Before we structure a Melbourne bridging deal, we model: total interest if the exit takes 50% longer than planned, the cost of an extension fee, a 10% sale price shortfall, and a refinance decline. If any of those scenarios push you past comfortable, we restructure — lower LVR, shorter term, or a different lender — until the deal stands on its own.
Talk to us about your property purchase bridge, settlement bridging, or development finance and we'll model every plausible exit before you sign.
People Also Ask
Most bridging lenders allow a 1–3 month extension at a slightly higher rate plus an extension fee (typically $1–3K). Beyond that, lenders may require a refinance plan or partial paydown. We always negotiate extension terms upfront, before signing.
Talk to us →Yes — it's common. If the sale stalls, we can pivot to a refinance against the existing or new property, provided serviceability supports it. We plan the fallback at structuring time so the pivot is fast if needed.
Not always, but it dramatically improves your terms. Without a signed contract, lenders rely on agent appraisals and may cap LVR lower or charge a higher rate. A contract on the existing home is the strongest sale-exit evidence you can provide.
Get in touch →Where this applies in Melbourne
See how this strategy plays out in the suburbs where we most often arrange this kind of finance.
Related insights
Bridging Loans vs Caveat Loans: Which Is Right for You?
Both are short-term, both are fast — but they secure differently and suit different exit strategies. Here's how to choose.
Winning a Toorak Auction: A Finance Playbook
Toorak moves fast. Pre-approved bridging finance is the difference between bidding with confidence and walking away.
Settlement Gap Survival Guide for Melbourne Property Owners
When your sale settles after your purchase, settlement bridging keeps the deal alive without panic refinancing.