Bridging finance is a loan that covers a funding gap until a named event happens, such as a property sale, a settlement or a refinance, and it is expected to be repaid from that event. For New Zealand businesses, HomeSec lends $20K to $1M for genuine business or commercial purposes, secured against suitable New Zealand property and subject to assessment.
If your business is waiting on a sale or settlement, you can see if you qualify in a few minutes.
Key takeaways
- Bridging finance covers the gap between needing funds now and a named event that will repay the loan later.
- HomeSec lends against suitable New Zealand property, using first or second mortgages.
- Property offered as security may be at risk if loan obligations are not met.
- A clear, realistic exit event is central to how bridging finance is assessed and repaid.
- All applications are subject to lending criteria, assessment and approval.
How does bridging finance work, step by step?
Bridging finance generally follows a set path from application to repayment, and each stage depends on the lender’s assessment.
- Application. The business explains what the funds are for and which event will repay the loan.
- Assessment. The lender reviews the purpose, the exit event and the property being offered as security.
- Documents. The lender requests the information it needs to complete the assessment.
- Security. A mortgage is arranged over suitable New Zealand property, either as a first or second mortgage.
- Legal work and settlement. Lawyers complete the paperwork and the loan settles if it is approved.
- Repayment. The loan is repaid when the named event, such as a sale or refinance, takes place.
What does bridging finance mean?
Bridging finance means borrowing to “bridge” from today to a known future event that will provide the money to repay the loan. That event might be the sale of a property, a settlement date or a planned refinance with another lender.
The defining feature is the exit event. Unlike a loan repaid gradually from trading income, a bridging loan is expected to be cleared in one step when the named event happens. Because of this, lenders tend to look closely at how likely the event is and how firm its timing is.
At HomeSec, finance is for genuine business or commercial purposes only and requires suitable New Zealand property security, subject to assessment. You can read more about the product itself on our bridging finance for New Zealand business owners page.
How does bridging finance generally work?
In general terms, a bridging loan is secured against property and repaid from the exit event rather than from regular income. The property gives the lender security, and the named event gives the loan a clear way to be repaid.
The process usually moves through application, assessment, documents, security, legal work and settlement. Each step has to be completed before funds can be released, and none of them assumes an outcome in advance.
Costs and loan structure depend on the lender’s current policy and the details of each application. HomeSec does not publish an interest rate or rate range, so the cost of any loan is set out only after assessment. Comparing the total cost of borrowing, including any fees, is an important part of weighing up whether bridging finance makes sense.
When do businesses consider bridging finance?
Businesses tend to look at bridging finance when money is needed before a known event that will free up funds. Common situations include:
- Waiting on a commercial property sale. A business may need funds before the sale of a property it owns has settled.
- Bridging to a settlement date. A purchase or other commitment may fall due before another settlement provides the cash.
- Bridging to a planned refinance. A business may need funds while a longer-arrangement refinance with another lender is being finalised.
In every case, the purpose must be a genuine business or commercial one. HomeSec does not provide finance for personal or household purposes.
Bridging finance is one of several funding options. A broader overview of options is available on our business finance in New Zealand page.
Who can bridging finance suit, and when is it not the answer?
Bridging finance can suit a business that has a clear, identifiable event to repay the loan and suitable New Zealand property to offer as security. It tends to fit situations where the timing of funds, rather than the overall ability to pay, is the main issue.
It may not be the answer in other situations. If there is no firm exit event, or if the event is uncertain, a loan repaid from a single future event carries more risk. If the need is ongoing working capital rather than a one-off gap, other forms of business funding may be worth looking at. Where the issue is a tax debt, Inland Revenue may offer options such as instalment arrangements, so it can be worth checking those first.
These are general points only. Whether any option fits a particular business depends on its own circumstances.
How is property used as security, and what are the risks?
HomeSec lends against suitable New Zealand property, using either a first or a second mortgage. The property is the lender’s security if the loan is not repaid as agreed.
A first mortgage is the primary charge over a property, which means it ranks ahead of other lenders if the property is sold. A second mortgage sits behind an existing first mortgage, so the second lender is repaid only after the first. Both can be used for bridging finance with HomeSec, subject to assessment.
The main risk is straightforward: property offered as security may be at risk if loan obligations are not met. If the exit event is delayed, falls through or raises less money than expected, the loan may still need to be repaid. That is why a realistic exit plan, including what happens if timing slips, matters before borrowing against property.
What does bridging finance with HomeSec look like?
HomeSec lends $20K to $1M to New Zealand businesses, secured against suitable New Zealand property. The table below sets out the key features in plain language.
| Feature | HomeSec position |
|---|---|
| Loan amounts | $20K to $1M |
| Security | Suitable New Zealand property, first or second mortgage |
| Valuations and cashflow records | Not needed |
| Scheduled payments | Up to six months with no scheduled payments |
| Funding time | May be possible in as little as 24 hours, subject to approval, documents, security, legal work and settlement requirements |
| Purpose | Genuine business or commercial purposes only |
All applications are subject to lending criteria, assessment and approval. Eligibility depends on the lender’s assessment, and no outcome is set until that assessment is complete.
HomeSec Business Finance Limited, NZBN 9429047936010, is based at 152 Fanshawe Street, Auckland 1010, and can be reached on 09 888 6550.
What should a business consider before applying?
Before applying for bridging finance, it helps to work through a few practical questions:
- How clear is the exit event? A named sale, settlement or refinance with a realistic timeline is central to repayment.
- What is the timing risk? Consider what would happen if the event took longer than planned.
- What is the total cost of borrowing? Look at interest and fees across the full time the loan may be in place.
- What is the effect on the property offered as security? That property may be at risk if loan obligations are not met.
General information on business funding is available from business.govt.nz. The tax treatment of business borrowing costs can be checked with Inland Revenue. Consumer Protection publishes general information about credit and debt.
Many business owners find it useful to get independent advice from an accountant, lawyer or financial adviser before borrowing against property.
Ready to take the next step?
If your business has a clear sale, settlement or refinance coming up, you can start your application in a few minutes. It helps to have details of the property you would offer as security, what the funds are for and the event that will repay the loan. Eligibility depends on the lender’s assessment.
No obligation. Eligibility is subject to assessment.
FAQ
How is bridging finance different from a standard business loan?
Bridging finance is usually repaid in one step from a named event, such as a property sale, settlement or refinance. A standard business loan is more often repaid over time from trading income. With HomeSec, both are for genuine business or commercial purposes and require suitable New Zealand property security. Because repayment depends on the exit event, the likelihood and timing of that event is a key part of the assessment.
Can bridging finance be secured with a second mortgage?
Yes, HomeSec lends against suitable New Zealand property using either first or second mortgages. A second mortgage ranks behind any existing first mortgage, so the first lender is repaid before the second if the property is sold. Whether a particular property is suitable depends on the lender’s assessment. Property offered as security may be at risk if loan obligations are not met.
How quickly can bridging finance be arranged?
With HomeSec, funding may be possible in as little as 24 hours, subject to approval, documents, security, legal work and settlement requirements. Timing depends on how quickly each stage can be completed, including the legal work on the property. No valuations or cashflow records are needed, which can reduce paperwork. All applications are subject to lending criteria, assessment and approval.
What happens if the property sale or settlement is delayed?
The loan generally still needs to be repaid under its agreed terms, even if the exit event takes longer than expected. Property offered as security may be at risk if loan obligations are not met. For this reason, it is worth having a realistic exit plan that allows for delays before borrowing. Raising any expected delay with the lender early is generally more helpful than waiting.
Does HomeSec need a valuation or cashflow records for bridging finance?
No valuations or cashflow records are needed for HomeSec finance. The loan still requires suitable New Zealand property security and a genuine business or commercial purpose. The lender will request the documents it needs during assessment, and all applications are subject to lending criteria, assessment and approval.
Are there payments during the bridging period?
HomeSec offers up to six months with no scheduled payments. Interest and fees may still apply, and the full amount is generally expected to be repaid from the exit event. Loan structure depends on the lender’s current policy and the individual application. Checking the total cost of borrowing before signing is a sensible general step.
This is general information only and is not financial advice. It does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval. Fees and charges may apply.