Bridging Finance¶


Product ID	`PRD-023`
Launch tier	3
Jurisdiction	NZ + AU
Status	Planned
Regulations	CCCFA 2003 · NCC Act 2009 (NCCP) · NZ Banking Code · ABA Banking Code · ASIC RG 209

Overview¶

Bridging Finance is a short-term credit facility secured against both the existing property (being sold) and the new property (being purchased), or in some cases against the new property alone where a signed unconditional sale agreement exists on the existing property (closed bridge). The loan term is short — typically 6 to 12 months. Interest may capitalise (roll up and be added to the principal balance) or be paid monthly depending on the borrower's serviceability position. The bridge loan is repaid in full from the proceeds of the existing property sale at settlement.

The product is regulated under CCCFA (NZ) and NCCP (AU) as a credit contract secured against real property. Responsible lending obligations apply in full, including peak debt affordability assessment and disclosure of the total amount repayable including any capitalised interest.

Key terms¶

Term	Detail
Loan type	Short-term secured credit facility
Security	First or second mortgage over existing and/or new property
Maximum term	12 months
Maximum LVR	80% of combined security value
Interest type	Variable; may capitalise if serviceability requires
Minimum loan amount	$100,000 NZD / AUD
Repayment during bridge	Interest-only (or capitalising); principal repaid from sale proceeds
End date	Settlement of existing property sale, or 12 months — whichever is sooner

System capabilities¶

MOD-115 registers and monitors both security properties. The module supports multiple security records per loan, allowing the combined LVR across two distinct titles to be tracked as a single credit exposure. Each security record holds current valuation, mortgage rank, and LVR contribution.

MOD-116 manages the short-term loan lifecycle: end-date notification is dispatched via MOD-063 at 90, 60, and 30 days prior to the bridge end date. If the existing property sale is delayed, an extension request workflow is available through MOD-116 — subject to credit team approval and an extension fee per MOD-110.

MOD-005 accrues interest daily. If the loan is structured with capitalising interest, the monthly accrued amount is posted as a debit to the principal balance via MOD-001 rather than charged to the borrower's transaction account. MOD-115 recalculates the combined LVR after each capitalisation event to confirm the LVR ceiling remains within policy.

MOD-027 assesses serviceability on a peak debt basis. Both the bridge loan and any existing mortgage on the new property are included in the affordability calculation — the borrower must demonstrate capacity to service the maximum concurrent debt position, not merely the end-state mortgage.

Eligibility¶

To be eligible for Bridging Finance, the applicant must:

Hold a signed sale and purchase agreement for the property being purchased, and either a signed sale agreement for the existing property (closed bridge) or acceptable evidence that the existing property will be listed and sold within the bridge term (open bridge)
Pass credit assessment (MOD-028) — credit history, defaults, and existing obligations reviewed
Demonstrate peak debt serviceability at the higher of the current variable rate plus a 3% buffer or the rate at which interest capitalises to the expected end-date balance (CON-004 disclosure applies)
Have combined LVR across both securities within the policy limit of 80%
Not have the existing property subject to a caveat, encumbrance, or dispute that would materially delay settlement

Account opening¶

The application and opening workflow follows these steps:

Pre-approval — indicative assessment based on estimated property values and debt position
Full application — submission of both sale and purchase agreements, evidence of existing mortgage, income verification, and valuation instructions
Dual security valuation — MOD-115 creates two security records and registers a valuation instruction for each property; combined LVR is calculated on receipt of both valuations
Affordability assessment — MOD-027 runs peak debt serviceability on the combined bridge and mortgage position; MOD-028 performs full credit assessment
Offer — credit decision issued with full disclosure of capitalised interest (if applicable), total amount repayable, and bridge end date (CON-004, MOD-050)
Drawdown — funds advanced at settlement of the new property purchase; first mortgage registered over new property, second mortgage (or caveat) registered over existing property

Fee structure¶

Fees are maintained in the fee schedule administered by MOD-110. Standard fees for this product include:

Establishment fee — applied at drawdown
Legal and security fees — dual security means dual conveyancing; borrower meets both sets of legal costs
Monthly service fee — if applicable per the fee schedule in effect at origination
Extension fee — charged if the bridge term is extended beyond the original end date; subject to credit team approval
Discharge fee — applied when the existing property security is released at sale settlement

No break cost applies. This is a variable rate product and does not carry a fixed-rate early repayment charge. Partial repayments are permitted at any time.

Interest calculation¶

Interest accrues daily via MOD-005 on the outstanding principal balance.

Paying interest monthly: accrued interest is charged to the borrower's nominated transaction account on the last business day of each calendar month. The loan balance does not change except upon repayment.

Capitalising interest: accrued interest is posted as a debit to the loan principal via MOD-001 on the last business day of each calendar month. The principal balance increases. MOD-115 recalculates the combined LVR after each capitalisation event. If the combined LVR breaches the policy ceiling following capitalisation, an alert is generated and routed to the credit team for review. The total capitalised balance at the expected end date must be disclosed to the customer at origination (CON-004).

Statements¶

Monthly statements are produced by MOD-113. Each statement includes:

Current drawn balance (including any capitalised interest if applicable)
Interest accrued in the period
Current LVR across both security properties
Days remaining to bridge end date
Next expected event (capitalisation date, end-date notice, or settlement advice)

Statements are delivered via the customer's nominated channel (in-app, email, or post) per communication preferences held in MOD-003.

Closing¶

The closing sequence is initiated when the existing property sale settles:

Conveyancer notifies the bank of settlement
MOD-116 initiates the repayment workflow
Sale proceeds are received; the first mortgage over the existing property is discharged
Proceeds are applied to the full bridge loan balance (principal plus any accrued but uncapitalised interest)
MOD-115 marks the existing property security record as discharged
Any surplus proceeds are transferred to the customer's nominated transaction account (MOD-007)
If the bridge loan balance is fully repaid, the account is closed and discharge documentation is issued
If a residual balance remains (e.g. proceeds were insufficient), the credit team reviews — the residual may convert to a standard residential mortgage over the new property, subject to a fresh credit assessment

If the existing property does not settle before the bridge end date, MOD-116 triggers the end-date alert workflow. The credit team must approve an extension or initiate enforcement proceedings per the bank's collections policy.

Regulatory compliance¶

CCCFA (NZ) and NCCP (AU). Peak debt affordability assessment is mandatory at origination. The assessment must demonstrate that the borrower can service the maximum concurrent debt position — bridge loan plus any other mortgage — and must be documented in the credit file. Responsible lending disclosures (CON-004, CON-008) must be provided before the contract is signed.

Capitalising interest disclosure. Where interest capitalises, the full projected balance at the expected end date must be disclosed at origination. The customer must acknowledge this disclosure. The disclosure is generated by MOD-050 and stored in the credit file.

LVR limits. In NZ, RBNZ BS19 investor LVR limits apply to bridging loans where the borrower holds investment property. The combined LVR across both securities must be tracked on a per-drawdown and per-capitalisation basis. In AU, APRA APS 220 collateral adequacy requirements apply to both security properties throughout the bridge term.

Open bridge risk. Where no unconditional sale agreement exists on the existing property (open bridge), the bank must assess the risk that the property does not sell within the term. This assessment must be documented. Open bridge approvals require credit team sign-off above standard lending authority — CLQ-002 liquidity policy applies to the concentration of short-term bridge book exposure.

Governing policies¶

CRE-001 — Credit Risk Management Policy
CRE-002 — Responsible Lending Policy
CRE-003 — Credit Decisioning & Scorecard Policy
CRE-004 — Loan Origination Standards
CRE-006 — Impairment & Provisioning Policy
CON-004 — Product Disclosure & Sales Practice Policy
CON-005 — Fee & Pricing Transparency Policy
CON-008 — Financial Hardship Policy
CLQ-002 — Liquidity Risk Management Policy
PAY-001 — Payment Operations Policy

Implementation modules¶

Module	Name	Status
MOD-001	Double-entry posting engine	Deployed
MOD-003	Real-time balance engine	Deployed
MOD-005	Daily accrual calculator	Deployed
MOD-007	Account state machine	Deployed
MOD-027	Affordability calculator	Deployed
MOD-028	Credit score & risk rating	Deployed
MOD-029	Pre-approval engine	Deployed
MOD-050	Disclosure enforcement module	Deployed
MOD-065	Credit servicing & collections	Deployed
MOD-066	Collateral & security management	Deployed
MOD-110	Fee engine	Deployed
MOD-113	Statement generation	Not started
MOD-115	Property security and LVR management	Deployed
MOD-116	Mortgage servicing engine	Deployed

Compiled 2026-05-22 from source/entities/products/PRD-023.yaml