Bridging to buy a commercial premises before selling

The situation

This is an anonymised composite illustrating a common pattern, not a specific settled transaction. A business owner finds a larger commercial premises better suited to their growing operation, with a settlement date that arrives well before their existing property, which they intend to sell, has gone to market. They do not want to lose the new premises to another buyer while they wait for their existing property to sell.

Why it's hard

The business owner's equity is largely tied up in the existing property, and a standard purchase loan for the new premises would require that equity to already be realised as cash, which it is not. Waiting to list, sell and settle the existing property before committing to the new purchase risks losing the new premises altogether, particularly in a competitive market.

How it can be structured

A bridging loan secured across both properties is the standard structure here, sized to cover the new purchase and existing debt, with the facility repaid once the existing property sells; the exit is the sale proceeds from the current premises. Where the existing property is expected to sell quickly and with strong certainty, some lenders will structure the bridge with interest capitalised, so no repayments are required during the short overlap period. If the existing property is not yet listed, a lender will typically want a clear marketing plan and a realistic timeframe before agreeing terms, since an undefined sale timeline weakens the exit considerably.

Lenders assessing this kind of bridge will typically want an independent valuation on both properties rather than relying on the purchaser's own estimate of what the existing premises will achieve, since an optimistic sale price assumption is one of the more common reasons a bridging facility's exit falls short of expectations. Where the existing property has already attracted genuine interest, even informally, documenting this through a real estate agent's appraisal or expressions of interest from prospective buyers meaningfully strengthens the exit story presented to the lender. Some bridging facilities are structured with a stepped reduction in the facility limit as partial proceeds become available, for instance where a portion of the existing property is pre-sold or a deposit is received ahead of full settlement, rather than treating the exit as a single, all-or-nothing event. Purchasers should also confirm whether their existing bank facility, if any, carries an early repayment cost, since this affects the true net proceeds available to repay the bridge once the existing property does sell.

What it typically costs

Bridging facilities are priced for their short term and the certainty of the exit, quoted on enquiry once a lender has reviewed both properties and the sale plan for the existing premises. An establishment fee and, in some structures, capitalised interest are standard, with the total cost generally modest relative to the value of securing the new premises without a forced, rushed sale of the old one.

Timeline

1. Same day — scoping call confirming both properties, the new purchase contract and the existing property's sale plan.
2. 2–5 business days — valuations on both properties and lender matching.
3. 5–10 business days — credit approval and offer.
4. 3–5 business days — settlement of the new purchase, bridging facility in place.

Questions we'd ask you

1. Is the existing property already listed for sale, and if not, what is the realistic timeline to list it?
2. What is the combined equity across both properties once the new purchase settles?
3. Do you have a preferred agent and an indicative sale price for the existing premises?
4. Can the business service interest on the bridge if the sale takes longer than expected?
5. Is there flexibility on the new purchase's settlement date if needed?

Related

Bridging loans · Commercial property loans · Business owners · Bridging