Buying your next home before selling: bridging vs sell-first

One of the trickiest parts of moving house is timing. Do you buy your next home before your current one sells, or wait until settlement before you start looking? This guide walks through the two main paths, bridging finance and sell-first, so you can weigh up the real trade-offs.

The two paths in plain English

Bridging finance lets you buy your next home while your current one is still on the market, or already sold but not yet settled. You hold both properties for a period, then use the sale proceeds to pay down the bridging loan once your first home sells.

Sell-first means settling the sale of your current home before you buy. You know your exact numbers upfront, but you may need somewhere to stay in the gap between selling and buying.

The bridging path, in brief

If you go the bridging route, two terms matter: peak debt (what you owe while you hold both homes) and end debt (what's left once your current home sells and becomes your ongoing mortgage). Lenders assess your serviceability against the end debt, but the peak debt still has to be manageable while it lasts. Our bridging finance guide explains the mechanics, how interest is treated and the risks in full.

Sell first, then buy

Selling first gives you certainty. You know exactly what you have to spend, there's no peak debt to manage, and serviceability is simpler to assess.

The trade-off is the gap in between. You might need to rent short-term or stay with family while you find the next place, and there's a real risk of missing a property you love because you're not yet in a position to make an unconditional offer.

Where the deposit comes from either way

In both paths, the deposit for your next home usually comes from the equity in your current one.

With bridging, that equity is accessed straight away through the bridging loan, before your current home has actually sold.

With sell-first, the deposit comes from the actual sale proceeds, once settlement has happened and the numbers are locked in.

Risks of each path

Bridging risk: if your current home takes longer to sell than expected, or sells for less, the peak debt period runs longer and interest costs add up. This is the scenario worth stress-testing before you commit.

Sell-first risk: you might sell successfully but not find the next home in time, leading to temporary housing costs, storage costs, and possibly having to compromise on the next purchase under time pressure.

How to decide

There's no universally right answer. It depends on:

• How quickly homes are selling in your area right now.
• How comfortable you are holding some uncertainty (bridging) versus wanting full certainty (sell-first).
• Whether you have a cash buffer to absorb a longer-than-expected bridging period.
• How competitive the market is for the home you want to buy next.

Getting pre-assessed for both scenarios, before you make any decisions, is the best way to see which one actually suits your numbers.

Whichever path fits your situation, it helps to see the real numbers before you commit either way. koala financial can model both bridging and sell-first scenarios so you can decide which path is right for you.

Frequently asked questions