Bridging Finance Repayments — How They Work

Bridging loan repayments are simpler than they look. Most are structured as interest-only — and many borrowers don't make any monthly payments at all. Here's how the two repayment options work, then use our calculator to estimate yours.

How do bridging loan repayments work?

You have two options: (1) capitalised interest — no monthly payments, interest is added to the loan and repaid in full when the property sells; (2) serviced interest — pay monthly interest only, principal repaid in full at the end. Capitalised is more common for short bridges.

The lender adds each month's interest to the loan balance. You make zero monthly payments during the bridge. When your existing property sells (or you refinance), you pay back the principal plus all accumulated interest in one transaction at settlement.

Best for: borrowers who want maximum cash-flow flexibility while the bridge runs.

You pay monthly interest at the contracted rate, exactly like an interest-only home loan. The principal is repaid in full when the bridge ends. Total cost is slightly lower than capitalised because interest doesn't compound.

Best for: borrowers with strong cash flow who want to minimise total interest cost.

$500,000 bridge at 9.5% p.a. for 6 months: monthly interest is $3,958. Serviced: pay $3,958/month for 6 months — total interest $23,750. Capitalised: pay nothing monthly — loan grows to ~$524,000 by the end, total interest ~$24,000. The difference is marginal on short bridges.

Try different loan amounts, rates and terms in our bridging loan calculator. It estimates monthly interest, total cost, and shows you how each variable impacts the bottom line.