Skip to main contentA commercial mortgage bridging loan is short-term finance secured by commercial property, used to cover the gap between buying a new commercial asset and settling on the sale, refinance or capital raise that will repay it. The defining feature isn’t the rate or the term, it’s the timing: the exit is known, the gap is finite, and the bridge connects the immediate transaction to the long-term funding that follows.
Most bridging finance discussed online is residential bridging (buying a home before selling another). A commercial mortgage bridging loan is a different product: the security is commercial property and the exit is a commercial settlement, refinance or sale. The lender panel, the loan-to-value ratios (LVRs), the documentation and the cost profile all work differently.
As a specialist finance broker in Melbourne, Loanworx arranges commercial mortgage bridging loans for business owners, investors and developers who need short-term finance with a clear exit. Whether you’re racing to settle a commercial purchase before an existing asset sells, releasing equity to fund the next acquisition, or filling a gap in a development capital stack, we know which lenders move quickly and at what cost.
Got a timing problem on a commercial transaction? Call us on 1300 562 696 or get in touch and we’ll be back to you shortly.
Residential and commercial bridging loans are sometimes treated as the same product, but in practice they sit in different lending categories. The security, the lender panel, the LVR ceilings, the assessment and the cost profile all differ. Knowing the line between the two saves time and avoids approaching the wrong lenders.
A commercial mortgage bridging loan is secured by commercial property: office, retail, industrial, mixed-use, specialised, or sometimes a commercial development site. Residential bridging is secured by a home or residential investment. Most major banks run their bridging product on the residential side and either don’t offer commercial bridging at all, or run it through a separate commercial credit team with different rules.
Residential bridging commonly funds up to 80% of the peak debt (the combined balance during the bridging period). Commercial bridging LVRs are typically lower, often 60% to 70% of the commercial property value, reflecting the lower base LVRs that apply to commercial property generally. We model the peak debt position the way the lender will, so there are no surprises at credit assessment.
On a residential bridge, lenders mostly look at the borrower’s income to ensure interest can be serviced through the bridging period. On a commercial bridge, lenders look first at the exit (the sale contract, the refinance term sheet, the development end debt) and only secondarily at the borrower. A clear, evidenced, plausible exit is what closes commercial bridging deals.
Major banks rarely offer fast commercial bridging. The space is mostly occupied by specialist commercial lenders, private credit funds and select non-banks who can move on short turnarounds. Most business owners haven’t personally dealt with these lenders, which is where broker relationships across the specialist panel matter.
Commercial bridging is built for situations where the timing of a commercial transaction matters more than the headline interest rate. The use cases tend to fall into a handful of recurring patterns, from buying a commercial property before the existing one sells through to filling a gap in a development capital stack.
The most common scenario. A business or investor finds the right commercial asset before the existing commercial property has settled on sale. The bridge funds the new acquisition, and the proceeds from the sale repay the bridge once settlement comes through. Avoids the alternative of either missing the new property or accepting a lower offer to force a quick sale of the existing one.
Where there’s significant equity in an existing commercial property that isn’t being sold, a bridging facility can release that equity short-term to fund a new purchase. The exit is then a refinance of either property (or both) onto a long-term commercial facility once cash flow and valuations are in place.
If an existing commercial facility is expiring (a balloon falls due, a non-bank loan term ends, or a private lender is calling in the facility) and the long-term replacement is taking longer to settle than expected, a bridge can buy the time needed to land the replacement loan cleanly. The exit is the new long-term commercial mortgage.
On a commercial or mixed-use development, bridging can fund the gap between settlement of the site and drawdown of construction finance, or between practical completion and the long-term investment mortgage taking over. Specialist development bridging is its own subcategory, with lenders that price specifically for the construction or stabilisation period.
Commercial properties at auction or under a tight settlement deadline often can’t wait for a standard 4 to 6 week bank assessment. A bridge sized for a fast settlement, then refinanced onto a long-term facility once the borrower has time to optimise the long-term loan, lets the deal proceed without losing the asset.
Got a timing-critical commercial scenario in mind? Call us on 1300 562 696 and we’ll work through whether a bridge is the right tool, or whether something else fits better.
Every commercial bridge is structured around the same three questions: how much is needed, what’s the security, and what’s the exit. Here’s how the mechanics typically work.
The lender takes a first or second mortgage over the commercial property being funded, the existing commercial property, or both. Where the bridge is secured by multiple assets, the combined LVR (peak debt as a percentage of combined property value) drives the lender’s view of risk.
On most commercial bridging facilities, interest can be capitalised (added to the loan balance and paid at the end), prepaid (paid upfront at drawdown, deducted from the advance) or serviced monthly. Capitalised and prepaid are common where the borrower wants to avoid monthly cash outflows during the bridging period. Each option affects the effective cost and the headline LVR differently, and we model both before the application is submitted.
Lenders generally require evidence of the exit before settling a commercial bridge. That can be a signed sale contract on the existing property, a letter of offer or term sheet from a long-term lender, a planned development end-debt facility, or a refinance commitment. The clearer and earlier the exit is evidenced, the better the bridge pricing and the broader the lender shortlist.
Commercial bridges typically run 3 to 12 months, occasionally extending to 18 or 24 months for development or larger transactions. Extensions are negotiable but generally come at a cost, both in extension fees and in the lender re-pricing the facility. Treating the stated term as the actual term, not as a flexible window, is part of running a clean bridge.
Commercial bridging is priced differently to long-term commercial lending. Rates are typically higher than standard commercial mortgages, with establishment fees, valuation fees, legal fees and (often) a discharge or exit fee at the back end. The all-in cost over the bridging period is what matters, not the headline rate, and we’ll model it both ways before you commit.
A commercial mortgage bridging loan application is shorter than a standard commercial mortgage application, but the specific points lenders focus on are different. The faster the lender can verify the exit, the faster the bridge can settle.
The most important single piece of the application. For a sale-driven exit, that’s a signed contract of sale, a copy of the marketing campaign and recent agent feedback, or a price expectation supported by recent comparable sales. For a refinance-driven exit, that’s a letter of offer or detailed term sheet from the take-out lender, plus an indicative timeline. For a development end-debt exit, that’s the construction certificate, projected completion date and an indicative term sheet from the end debt lender.
Commercial bridging lenders typically require a current commercial valuation by a panel valuer, ordered at the lender’s instruction. For very fast settlements, some lenders will accept a desktop valuation or kerbside inspection initially, with a full valuation completed before settlement. The valuation is the single biggest input to LVR and pricing.
A simple statement of where the loan proceeds are going (deposit on a new acquisition, settlement balance, equity release for a specified purpose, refinance of an expiring loan) along with supporting documentation. Lenders won’t fund bridging without a defined purpose, and vague answers slow the application.
Identification for all directors of the borrower entity, Australian Business Number (ABN) and Australian Company Number (ACN) details, last two years of business financials or tax returns where available, and a brief summary of the directors’ existing property holdings and commercial track record. The depth of financial documentation is usually lighter than for a long-term commercial mortgage, since the exit is doing most of the work.
Building insurance on the commercial property with the lender noted as financier or mortgagee, and where the property is leased, a copy of the lease and rent roll. These are usually finalised in the last few days before settlement and shouldn’t slow the assessment.
Commercial bridging is one of the parts of commercial finance where lender choice matters most, and where most borrowers have the least direct experience. The right lender for a 3-month sale-bridge on a metro industrial unit is rarely the same as the right lender for a 12-month development end-debt bridge on a regional mixed-use site.
Some commercial lenders advertise bridging but take 4 to 6 weeks to settle. Others actually settle in 5 to 10 business days when the documentation is clean. The difference rarely shows up on a website, but it shows up immediately in our experience working across the panel. For genuinely time-critical bridges, knowing which lenders actually move at the required speed is what separates a clean settlement from a missed one.
Commercial bridging proposals are notoriously hard to compare on rate alone, because the fee structures, capitalisation methods and exit fees differ widely between lenders. We model the all-in dollar cost across the realistic term of the bridge, so the comparison is on a like-for-like basis and the actual cheapest option is identifiable.
The exit is what gets a commercial bridge approved. We help structure and document the exit (sale, refinance, end debt, capital raise) so the take-out lender’s view is consistent with the bridging lender’s expectations. For investment-property exits, that often includes prepping a parallel application for commercial property investment loans so the long-term facility is ready to go when the bridge is repaid.
For most commercial bridging transactions, Loanworx is paid an upfront, and sometimes a trail, commission by the lender after settlement. Any commission, fees or charges will be disclosed before you proceed. A fee for service may apply, and we’ll always disclose it in writing before any work begins. No surprises.
Commercial bridging is a faster-moving conversation than a standard commercial loan, but the structure of the engagement is similar. Here’s how we typically work as your specialist finance broker in Melbourne.
We sit down with you (in person, by phone or by video) to understand the scenario, the timing, the security and the exit. No cost, no obligation. For urgent scenarios, we can often turn around an initial view within hours.
We confirm what the exit looks like and how lenders will see it, and identify the bridging lenders most likely to support the deal on the required timeline. For shorter bridges we may approach two or three lenders in parallel to test pricing.
We prepare and lodge the credit submission, including the exit analysis and security documentation, and liaise with the lender, your lawyer and any other parties through to settlement. Clean commercial bridges typically settle in 5 to 15 business days.
We stay in contact during the bridge to track the exit, flag any timing risks early, and pre-empt any need for an extension or change in plan. Bridges run cleanly when the exit is actively managed, not assumed.
We coordinate the discharge of the bridge and the funding of the long-term facility (or sale settlement) so the handover is clean, with no daylight between the two.
Every commercial bridge is priced individually. The table below gives a working guide to what’s commonly available across the main scenarios.
| Scenario | Typical LVR (industry guide) | Typical term (industry guide) |
|---|---|---|
| Bridge secured by single commercial asset | Up to 60% to 70% | 3 to 12 months |
| Bridge secured across two or more commercial assets | Up to 65% to 70% combined | 3 to 12 months |
| Bridge ahead of refinance to long-term commercial loan | Up to 65% to 70% | 3 to 6 months |
| Bridge into a development construction facility | Up to 60% to 65% of site value | 6 to 12 months |
| Bridge to development end debt (completed stock) | Up to 65% to 70% of completed value | 6 to 18 months |
| Private credit commercial bridge (non-bank) | Up to 70% to 75% | 3 to 24 months |
This is a general industry guide, not a commitment. The specific LVR, term and rate available to you will depend on the security, the exit, the lender and current market conditions. Call us on 1300 562 696 and we’ll come back with terms tailored to your scenario.
Commercial bridging is more expensive than long-term commercial lending. That’s the trade-off for speed and timing. The question isn’t whether it’s expensive in absolute terms, it’s whether the cost of bridging is less than the cost of missing the deal or accepting an unfavourable sale price on the existing asset. Here’s how to think about it.
The headline rate is only part of the cost. Commercial bridging rates can be materially higher than standard commercial mortgage rates. But because the bridging period is short, the total interest in dollar terms is often less than people first assume. A 3-month bridge at a higher rate may cost less in interest than a 6-month delay on a long-term mortgage at a lower rate.
Establishment, valuation, legal and discharge fees add up. On top of interest, expect establishment fees (typically 1% to 2% of the loan amount, sometimes higher for specialist lenders), valuation fees, lender legal fees, your own legal fees, and often a discharge or exit fee when the bridge is repaid. These can add 1.5% to 3% of the loan amount in non-interest costs, which we factor into the all-in cost upfront.
The cost of not bridging. The honest comparison is the cost of the bridge against the cost of the alternative. That might be losing a commercial property under contract, accepting a fire-sale price on the existing asset, paying default interest on an expiring facility, or holding up a development that’s accruing holding costs every week. Where the alternative is materially worse, a bridge can be the cheapest available option even at a higher rate.
Building extension costs into the plan. Always plan for the possibility that the exit takes longer than expected. Bridges that need to be extended typically cost more, both in extension fees and in re-pricing. The cleanest commercial bridges have an exit timeline with a buffer, so the planned term covers the realistic worst case rather than the optimistic case.
For clean scenarios with a documented exit and standard security, 5 to 15 business days from initial enquiry to settlement is achievable through specialist commercial bridging lenders. Some private credit lenders can move faster (sometimes within a week) when the documentation is in order. The biggest single factor is how quickly a current commercial valuation can be obtained, which is largely outside the borrower’s direct control.
Most mainstream commercial bridging facilities cap out at 65% to 70% LVR against the security property’s current value. Some specialist private credit lenders extend to 70% to 75%, occasionally higher with cross-collateralised security or with the borrower’s other commercial assets factored in. Beyond around 75%, the lender panel narrows significantly and pricing increases.
Yes, this is common on commercial bridges. Capitalised interest is added to the loan balance and paid at the end of the bridge from the exit proceeds, which avoids monthly cash outflows during the bridging period. The trade-off is that the loan balance grows over the term, which affects the headline LVR and total cost. Prepaid interest (paid upfront, deducted from the advance) is also an option some lenders prefer.
Most commercial bridging facilities can be extended by negotiation, typically at the cost of an extension fee and a possible repricing of the rate. The lender will want updated evidence of the exit and an explanation for the delay. Lenders are generally more accommodating where the borrower flags the issue early rather than letting the bridge run to its expiry date. We treat this as part of actively managing the bridge, not as a fallback.
Yes. Bridging against an unencumbered commercial property is usually a clean scenario for lenders, because the LVR is low and the security position is straightforward. This setup is common for releasing equity to fund a new acquisition, then refinancing the original property and the new one onto long-term facilities once the dust settles.
Commercial bridges are short-term, single-purpose facilities and are expected to be repaid in full at the end of the term. They generally don’t convert to long-term mortgages, although the same lender may offer a long-term facility as part of the take-out. The convention is to plan the long-term facility separately (often with a different lender) and use the bridge purely as the connecting finance.
Yes, this is one of the more common use cases. Bridging finance is often used to settle a development site before construction finance is in place, or to bridge between practical completion and the long-term investment mortgage on completed stock. Development bridging is its own subcategory, with lenders that price specifically for the construction or stabilisation period.
Generally not in the same way. Self-managed super funds (SMSFs) can only borrow under a limited recourse borrowing arrangement (LRBA), so security cannot be crossed and is structured differently from a commercial bridging facility. Short-term LRBAs are possible but uncommon, and the lender panel is very narrow. If an SMSF needs short-term commercial finance, we’d start with the LRBA structure and work backwards, rather than assuming a standard bridge will fit.
A commercial bridge is a short-term, single-purpose facility secured by commercial property, with a defined exit (a sale, refinance or end-debt). A commercial overdraft is a revolving working capital facility, typically secured against the business’s wider position rather than a specific property, and is used to smooth ongoing cash flow rather than fund a one-off transaction. The two products solve different problems and the lender panels for each barely overlap.
If you’re staring at a timing problem on a commercial transaction, whether it’s a purchase ahead of a sale, an expiring facility, a development funding gap, or an auction settlement, an early conversation is usually the difference between a clean bridge and a stressed one. The earlier the bridge is structured, the better the pricing and the broader the lender choice.
Call us on 1300 562 696 or book a free, no-obligation chat with the Loanworx team. We work with business owners, commercial investors and developers across metropolitan Melbourne and the surrounding suburbs.
Level 15/412 St Kilda Rd
Melbourne VIC 3004
Loanworx Group Pty Ltd as trustee for Loanworx Group Trust and brokers representing it, are credit Representatives of Loanworx Group Licencing Pty Ltd (Australian Credit Licence number 495267). Please note, we adopt best practice regarding Australia’s privacy legislation. Your contact information will be collected by us and by our aggregator, and its subsidiaries and related businesses. We use this information to stay in contact and provide our services to you, and we may also use your information to offer or provide you with additional products or services or ask for your feedback. We may not be able to assist you if we do not have your current contact information. We may need to disclose your information to our associates, contractors, and service providers, who may be overseas. Our Privacy Policy available at www.loanworx.com.au contains information about how you can access your personal information and request corrections or complain if you are dissatisfied with how we have dealt with your personal information.
Copyright © Loanworx | Privacy Policy
Optimized by Seraphinite Accelerator
