Waiting on a refinance? Bridging the gap to the new lender

Refinancing is supposed to make things simpler: a better structure, a longer term, one lender instead of three. But a refinance moves at the pace of its slowest step. Valuations get booked, financials get queried, a credit condition appears, the outgoing lender takes its time with the discharge. Meanwhile, something in the business can’t wait.

That’s a refinance gap. Event A is the deadline: a facility that expires, an ATO due date, a purchase settlement, a supplier who needs paying. Event B is the day the new loan settles. A short bridge spans it.

When does a refinance gap happen?

Some of the most common versions:

• A facility is expiring. A short-term or interest-only facility reaches its end date and the existing lender won’t roll it over, but the replacement isn’t ready.
• A deadline arrives mid-application. A tax bill, a statutory payment or a supplier arrangement falls due while the refinance is still in assessment.
• Something is blocking the refinance. Arrears, a tax debt or a small second-ranking loan is making the new lender hesitate, and clearing it first would let the application proceed.
• A purchase and a refinance are being done together, and the purchase has a fixed date the refinance can’t match.

How strong is a refinance as an exit?

It depends entirely on where the application is up to. A useful way to think about it:

Refinance stage	Strength as an exit
Not yet applied	A plan, not an exit. Expect questions about plan B
Applied, being assessed	Reasonable, if the application is well prepared
Conditional approval issued	Good; the conditions are the remaining risk
Formal approval, documents issued	Strong; timing is the main question
Settlement booked	Very strong

The key test is simple: will the new loan be big enough to repay the bridge, plus its costs, on the day it settles? If yes, the bridge is really a timing tool. If not, the difference needs its own exit.

What evidence helps?

Bring the paper trail from the new lender, or from whoever is arranging the refinance:

• The application summary and the loan amount sought.
• Any approval letter, with its conditions.
• The valuation, or the date it’s booked.
• A realistic timetable to settlement.
• Statements for the facility being refinanced, including any arrears or payout figure.

Our exit evidence checklist lists these by exit type, and our page on the refinance exit explains how lenders test it.

Deadline getting close while the new lender works through its checklist? Check whether a short bridge fits in about a minute.

An illustrative example

A transport company is refinancing two property loans and an equipment facility into one longer-term loan secured over its depot. The new lender has issued a conditional approval subject to valuation. In the meantime, the company’s existing short-term loan on the depot reaches its expiry date and the current lender wants it repaid.

A bridge secured over the depot repays the expiring facility on time. When the refinance settles, about seven weeks later, it repays the bridge and consolidates the other debts. The company asked for a four-month term, allowing for the valuation to come in lower and for the new lender to ask for more information. (Illustrative scenario.)

What if the refinance stalls?

Plan the fallback before you borrow. The usual options are an extension of the bridge, a different refinance lender, a partial sale of assets, or a cash contribution. The easiest way to avoid a stall is to make the refinance application complete from the start: current financials, up-to-date tax lodgements, a clear explanation of any past issues.

One thing to watch: if you’re owed an ATO refund and have a tax debt at the same time, the ATO generally offsets the refund against the debt. Don’t count the same money twice in your refinance plan.

Which structure fits?

If the bridge is repaying the existing first mortgage, it may take first position itself. If the existing lender stays in place until the refinance, a second mortgage bridge sitting behind it is common. For a small, short gap and a strongly trading business, an unsecured bridge may be enough. The exit strength check is a quick way to see how your refinance exit looks to a lender.

How can you speed up the refinance itself?

The shorter the refinance takes, the shorter and cheaper the bridge. A few things that commonly save time:

• Give the new lender a complete pack at the start: financials, BAS, tax returns, loan statements, leases.
• Get the outgoing lender’s payout figure early, and ask how long its discharge process takes.
• Book the valuation promptly and give the valuer easy access.
• Answer conditions in writing the same week they’re raised.
• Keep your broker or banker informed of the bridge’s end date so they can prioritise.

Each saved week is a week less of bridging costs, and a week more of buffer.

Don’t let a slow refinance cost you a deadline

If the long-term solution is already in motion, it makes sense to protect it. Tell us where the refinance is up to, what’s due and when, and what security is available. It takes about 60 seconds, there’s no credit check when you first enquire, and your enquiry isn’t shopped around to other lenders. A real person reads it and calls you.

Please give us the actual loan amounts and dates, including any approval conditions. Accuracy now saves days later.

Bridge the gap to your refinance →