You’ve found the perfect next opportunity – a smart move in a shifting market. But your funds are tied up in another property, and the sale is dragging. With every day that passes, the deal risks slipping away. That’s where bridging finance comes in.
As New Zealand’s property and business markets cool, bridging loans are becoming increasingly valuable. In slower conditions, buyers often face delays in releasing equity from assets they’re selling – and traditional lenders aren’t always quick or flexible enough to respond. That’s driving demand for short-term finance solutions that can cover the gap and keep deals moving.
That’s according to Brent King, Managing Director of General Finance, who adds that bridging finance is only suitable for wholesale investors, rather than the general public. “By definition, it’s a bridge between two components,” he says. “You’re keen on buying a property or some other major asset, but securing the deal is contingent on the sale of another property or asset. If a slow sale imperils the deal, bridging finance can serve as the solution.”
In addressing the gap between deals, bridging loans typically span one to 24 months – radically different to the standard 30-year mortgage. King says that as “buyer’s markets” emerge, demand for these types of loans is rising, noting that the Real Estate Institute of New Zealand reports the median time to sell is at 41 days, up from 34 a year ago.
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This dovetails with analysis of Google metrics in the first quarter of 2025 which indicate a surge of more than 40% in bridging loan searches globally, reflecting heightened demand for liquidity solutions. The trend also aligns with Reserve Bank of New Zealand data showing non-bank lending, including bridging finance, gaining traction as borrowers turn to alternatives amid tighter restrictions on traditional lenders.
Moreover, for savvy investors bridging loans can help avoid fire sales while capitalising on market opportunities. King says this is true in both rising and falling markets, where the speed of access to finance can determine the success or otherwise of doing a deal.
“In the tougher markets we’re seeing now, bridging loans can facilitate snapping up a bargain,” he explains. “Even when finances are tied up in one asset, the availability of a bridge means negotiating a deal or bidding with confidence at an auction, knowing the funds are in place for that transaction.”
Unlike traditional mortgages, bridging loans prioritise turnaround times, with approvals possible in a day and funds available within 24 to 48 hours. In most cases, there’s an expectation that the loan will be settled within six months, with interest capitalised to the loan and rates above those associated with the typical 30-year mortgage.
King says lenders focus on property equity as security for these loans, rather than strict income or credit checks. He also points out that reduced rigour in lending criteria means bridging loans are explicitly only suitable for financially astute individuals with demonstrable investment or financial services acumen.
There are two types of bridging finance which carry differing levels of risk. Closed bridging finance addresses any funding shortfall when the sale on both assets is unconditional, with a requirement of bridging the gap between settlement dates. These loans typically have a maximum term of 12 months, but are often settled in shorter periods.
By contrast, open bridging finance becomes necessary when purchasing an asset without having an unconditional contract for the sale of a current asset. This carries a higher risk, notes King.
“In either of these transactions, borrowers must demonstrate a clear understanding of risk. The sale of an asset is necessary to complete the terms of the bridging loan and close out the transaction, and particularly in the case of open bridging finance the sale of that asset isn’t guaranteed,” he explains.
In addition to the higher interest rates and dependency on an asset sale, King says borrowers may face overlapping repayments (on a mortgage and on the bridging loan) until their exit plan materialises.
He says General Finance, operating since 1999, meets demand by tailoring loans with terms from three months to three years, only to qualifying financially literate borrowers.
King stresses that like any financial instrument, bridging finance is a useful tool in the right hands, and for the appropriate circumstances. “There are restrictions on its applicability and to whom it is accessible for good reason,” he says. “For wholesale borrowers, bridging loans are a strategic way to navigate delays, avoid distressed sales, or seize opportunities. It enables people to act when opportunity knocks.”
For more information to to generalfinance.co.nz
