Prestige
Buying before you sell: how the finance works on a $1 million plus home
7 min read · By Daniel Lagden · 6 November 2026
The short version
- Buying before you sell means a period of holding two homes, and the finance has to cover both.
- Lenders look at peak debt, which is everything you owe while you hold both, and end debt, which is what is left after the sale.
- A slow sale is the main cost risk, because interest and fees keep building while you wait.
- Both valuations can move against you, so plan for a lower sale price and a lower purchase valuation.
Upgrading usually means one awkward stretch: you own two homes, or you own neither. On a $1 million plus home the sums are bigger, so the stretch costs more and the lender looks harder. This guide sets out the main ways to handle it, what each one costs and what a lender checks.
Quick summary: buying first needs a plan for two loans. Work out peak debt, end debt and what a slow sale would cost before you make an offer.
Your four main options
| Option | How it works | Main risk |
|---|---|---|
| Sell first, then buy | You sell, settle, then shop with the money in hand. | You may need to rent in between, and you could miss the right home. |
| Buy first with bridging finance | A short term loan covers the purchase until your current home sells. | Interest and fees build up if the sale takes longer than planned. |
| Line up the settlement dates | You negotiate settlement dates so the sale and the purchase land close together. | It needs both parties to agree, and dates can still slip. |
| Use equity as the deposit | You borrow against your current home for the deposit and hold both loans until the sale. | Two loans at once, and the lender has to be satisfied you can afford both. |
How bridging finance works
Bridging finance lets you buy before you sell. The lender looks at two numbers. Peak debt is everything you owe while you hold both homes. End debt is what is left once the old home sells and its loan is repaid. Terms are short, often around six to twelve months, and the lender wants evidence of your sale plan, such as a listing agreement or a signed contract. Interest is often added to the loan rather than paid monthly, though policies vary by lender. Duty, buying costs and that capitalised interest usually add to peak debt, so the real figure is higher than the simple sum.
An example
Say your home is worth $1,800,000 and you owe $600,000. You want to buy a home for $2,400,000. The table shows the numbers, using an assumed 2.5 per cent for selling costs.
| Item | Amount |
|---|---|
| Current home value | $1,800,000 |
| Selling costs (assumed 2.5 per cent) | $45,000 |
| Current loan | $600,000 |
| Cash left from the sale after repaying the loan | $1,155,000 |
| Purchase price | $2,400,000 |
| Peak debt before duty, costs and interest (current loan plus the whole purchase price, assuming it is all borrowed) | $3,000,000 |
| End debt after the sale, before any interest or duty added to the loan | $1,245,000 |
Peak debt of $3,000,000 is about 71 per cent of the two properties' combined value of $4,200,000, which some lenders may accept. That ratio rises once duty, costs and interest are added. Now add the cost of waiting. If the sale takes six months and the new loan costs an assumed 7 per cent, the interest on the new loan comes to about $84,000, on top of what you pay on the old loan and before any bridging fees or transfer duty. If that interest and the duty are added to the loan, end debt rises by the same amount. That is the cost of buying first, and a slower sale makes it larger.
The rate, the selling costs and the loan to value comparison are assumptions for the example, not a quote, and lenders choose their own.
What a lender checks
- Whether you can afford the repayments on peak debt, or on end debt. Lenders differ on which they assess.
- The value of your current home, using their own valuation, which may be lower than the agent's estimate.
- Your plan for the sale: the listing, the price guidance and the timing.
- Your income and commitments, assessed in the usual way.
- How both properties are held as security.
The valuation risk, twice
Two valuations can move against you. If your current home values below the agent's guess, your end debt goes up. If the new home values below the price, you need more cash. Build a buffer for both. Our waterfront guide covers the second one in more detail.
Costs to allow for
- Bridging interest and fees.
- Valuation fees.
- Selling costs, including agent commission and marketing.
- Transfer duty and legal fees on the purchase.
- Holding costs on two homes, such as rates and insurance.
- Moving costs.
Before you list and buy: a checklist
- Get an estimate of your current home's value, and ask for a lender valuation early.
- Work out peak debt and end debt, and which one each lender uses.
- Decide how long you can afford to hold both homes, and what happens if the sale takes longer.
- Ask whether the purchase can be made subject to the sale, or settled on a date that suits.
- Have a pre approval sized for the purchase, not a rough estimate, in place before you offer.
- Keep a cash buffer for the gap.
General information only, current as at November 2026. Bridging terms, rates and valuations vary by lender. The figures here are illustrative, not a market benchmark or a quote.
Run the numbers
Frequently asked questions
Can I buy before I sell on a $2 million home?
It is possible with some lenders, if the peak debt, your income and your plan to sell meet their policy. Policies vary by lender and by loan size.
How long can I hold both homes?
Bridging terms vary by lender and are often a matter of months. Ask for the term, and what happens if the sale runs over.
Is bridging finance expensive?
It can be. Interest and fees build up while you hold both loans, and a delayed sale makes it worse. We work out the cost under a slow sale before you commit.
What if my home sells for less than expected?
Your end debt goes up, which can affect your repayments and what a lender will let you borrow. That is why the plan should use a cautious sale price.
Do I have to use bridging finance?
No. Selling first, lining up settlement dates or releasing equity for the deposit are alternatives. The right choice depends on your cash, your timing and how confident you are about the sale.
Planning to buy before you sell?
Tell us what your home might sell for and what you want to buy. We will map peak debt, end debt and the cost of a slow sale before you make an offer.
Plan my bridging financeGeneral information only. This article does not take into account your objectives, financial situation or needs, and is not credit assistance or financial advice.
