Buying new premises before the old ones sell

The classic bridging scenario

Every business that owns its premises eventually faces the same choice. The business has outgrown its building, a better location becomes available, or an investment opportunity appears. Selling first means risking the new property going to someone else and possibly having to move twice. Buying first means holding two properties for a while. Bridging finance makes buying first practical.

How it works

A bridging loan funds the purchase of the new property, secured over the new property, the existing one or both. Interest can be prepaid or added to the loan, so the business does not need to service two debts at once. When the existing property sells, the proceeds repay the bridging loan, and any remaining debt continues as an ordinary loan on the new property or is refinanced to a bank.

Stage	What happens
Exchange on the new property	Deposit paid, possibly from a secured loan
Settlement of the new property	Bridging loan funds the balance and costs
Holding both	No repayments if interest is prepaid or capitalised
Sale of the old property	Proceeds repay the bridging loan
End debt	Any remaining balance refinanced or repaid

Peak debt and end debt

Two figures matter. Peak debt is the most you will owe while holding both properties: the purchase cost, any existing loan, and capitalised interest and fees. End debt is what remains after the old property sells and its proceeds are applied. The bridging plan works when the sale reliably reduces peak debt to an end debt that is comfortable for the business or a bank. The bridging cost estimator shows both from your figures.

Setting the term

Work backwards from the sale. How long to prepare and list, how long a typical campaign runs for this type of property, and how long the settlement period will be. Then add a buffer. Commercial property in particular can take longer to sell than homes. The exit strategy timeline maps this out week by week.

Test your buy-before-you-sell plan with a specialist before you commit to the new property.

An illustrative move

Illustrative only. A veterinary clinic has run out of space in its converted house. A purpose-built clinic comes up for sale nearby. The owners agree to buy it with a two-month settlement and list their existing building the same week. A bridging loan secured over both properties funds the purchase, with interest capitalised. The old building sells after a four-month campaign, and its proceeds repay most of the bridge. The small end debt is refinanced to the owners’ bank on the new clinic.

Risks and how to manage them

• The sale takes longer. Build a buffer into the term, and know that the loan can stay in place if needed.
• The sale price is lower. Plan on a conservative figure, not the advertised price, and check end debt at that figure.
• Costs pile up. Include agent fees, marketing, legal costs, duty on the purchase and capitalised interest.
• The market shifts. Keep in regular contact with your agent and be ready to adjust the strategy.

Our guide on what to do when the first exit slips covers backup plans in detail.

Selling a business and its property

Sometimes the existing property is being sold along with the business that operates from it. That adds a second layer: the business sale and the property sale may settle together or separately, and the buyer’s finance affects both. Factor the business sale timeline into the exit, and keep the bridging term generous.

What to prepare

• the contract or offer for the new property
• an agent’s appraisal or listing agreement for the existing one
• mortgage statements for any existing loans
• a simple budget of all costs to settlement and sale
• identification for all owners and borrowers

Which property should secure the bridge?

Where both properties are involved, the security can be arranged several ways. Securing the bridge over both gives the strongest combined LVR and usually the most competitive terms. Securing it only over the new property keeps the old one free to sell without needing a discharge, but may limit the amount. Securing it only over the old property can work when the new purchase is funded by a bank. Your specialist will model each option against your figures and recommend the one that leaves you with the most flexibility when the sale settles.

Move once, on your timetable

Buying before you sell lets the business move into the right property at the right time. Tell us about both properties, the expected sale timeline and what is owed, and a specialist will show you the peak debt, the end debt and whether the plan works. There is no credit check when you first enquire, your enquiry stays with one team, and realistic sale figures help us give you a reliable answer. Plan your bridge.