Australian fintech Bridgit has set its sights on transforming bridging loans, offering speed through technology where others have exited the niche asset class.
With a recent $125 million debt facility from a global major bank, Bridgit is set to support an additional $500 million annually in residential property finance.
This funding, combined with a new 12-month loan term for up to $4 million and the fastest approval times in the market, is empowering Bridgit's growing broker network to help more Australians buy their next property before selling their existing home.
As Australia faces property shortages and rising prices and with major banks exiting the niche segment since the Royal Commission, Aaron Bassin (pictured above left), Bridgit’s CEO and co-founder, said bridging loans are becoming an essential tool for homeowners.
“We’ve seen a 300% increase in bridging loan enquiries since the start of 2024 and over half of homeowners agree that they’d like to unlock their property equity to buy before they sell,” Bassin said.
“With the median time for house listings on the market rising to 36 days in the first quarter of this year, bridging loans are a solution to get clients into their dream homes without compromise.”
Bridging loans solve a critical problem for many homeowners. Imagine you find a property you want to buy in a competitive market.
“You want to get in there and beat the competition, because let’s face it, Australia right now is a very competitive market,” Bassin said. “Prices are going up, there’s not a lot of stock, and you want to secure the property as soon as possible.”
With Bridgit, you can apply online or through a mortgage broker and get approval in as little as four minutes.
This allows you to make an offer with confidence, avoiding the traditional route of selling first and potentially facing temporary homelessness, double moving costs, and other expenses.
Traditionally, Australians have had to sell first to realise the liquidity in their home. This can often lead to a gap of time between selling an existing home and moving into the new one.
“People are either moving into short-term rentals, which are notoriously difficult to find right now, or moving in with family or friends. It has a huge emotional and financial cost,” Bassin said.
"On average, it costs about $16,000 for an Australian to move between homes before they can move into their final property.”
Bridging loans are designed to “bridge” this gap in time so the transition between selling, buying, and moving in is seamless.
“You could have an approval to go and put down an offer and have the peace of mind through that experience,” Bassin said.
Lana Moy (pictured above right), a mortgage adviser at Loan Market in the Northern Beaches of Sydney, has seen the traditional process play out firsthand on many occasions.
“It's now becoming more common that vendors and purchasers are unable to align their settlement dates,” said Moy. “There is a shorter stock supply, often leaving purchasers with limited bargaining power in relation to extending the settlement date past 42 days.
“If a homeowner hasn’t already sold their property and it is currently listed on the market, aligning settlement dates is impossible.”
This is where short-term bridging finance is “perfect” as it caters to a wide range of clients,” according to Moy.
“Those looking to downsize such as retirees, empty nesters, and retirement home moves, are increasingly considering bridging loans when making their move.”
Moy said downsizers and retirees who own their homes and want to secure an apartment in a retirement or over 55's village often need to settle on these purchases quickly and prepare their homes for sale which can take a couple of months.
“Bridging finance can relieve the added stress in this situation, where our clients can secure their next home and have time to prepare their family home for sale,” she said.
Bassin noted that the reasons for using equity to bridge are "quite broad."
"It may be for purchasing a new residential owner-occupied property or a new investment property, supporting a business investment, or helping their kids buy their first home,” he said.
“Overall, Bridgit is here to help everyday Australians achieve their financial aspirations."
In the traditional finance sector, bridging loans have largely fallen by the wayside with major banks shifting their focus to more vanilla-type lending.
Bassin said many banks have withdrawn their bridging services or imposed strict policies on the types of bridging they support.
“For instance, major banks often do not assist customers who are downsizing because these customers are not seen as long-term prospects, and the process is considered difficult and expensive.”
This shift, which can also be observed in other niche asset classes such as self-managed super funds (SMSF), has created an opportunity for companies like Bridgit to step In and innovate.
Bridgit's technology facilitates a seamless transfer of information, enabling the company to offer bridging loans to a wide range of customers.
“We addressed this gap in the market by offering speed, certainty, and easy access to finance,” Bassin said.
Private lenders have also moved into this space. However, Bassin said many are unregulated and charge exorbitant fees.
“I would advise all brokers and clients to stay away from those type of providers. Bridgit is a fully regulated provider, offering pricing comparable to major banks for bridging loans.”
In her brokerage, Moy said she felt more comfortable using Bridgit because they were specialists in their field.
“Bridging is what they do, not just a small component of their services. We, and in turn our clients, benefit from fast and accurate information that can be acted upon,” Moy said.
“Bridgit offers a super-fast assessment time frame, and the team is always willing to workshop different scenarios that mainstream lenders will not accommodate. It's a cost-effective solution for our clients.”
To facilitate this opportunity, Bridgit has partnered with major mortgage aggregators, including Mortgage Choice, Loan Market Group, Plan, Fast, Choice, Finsure, and Outsource Financial. With 9,000 accredited brokers opting to use Bridgit as their bridging solution in the last three years, the company is poised for significant growth.
"In addition to our existing partnerships, we have agreements out with two other major aggregators," Bassin said. "This level of engagement from brokers has been phenomenal and is a testament to the demand for our services."
