Peak debt and end debt: the two numbers every bridge is built on

An engineer designing a bridge starts with loads: the heaviest weight the structure will ever carry, and where that weight ends up. Bridging finance works the same way. Two numbers tell you almost everything about whether a bridge will stand up: peak debt and end debt.

What is peak debt?

Peak debt is the most you’ll owe at any point during the bridge. It usually occurs from the day the bridge settles until the exit event lands. For a buy-before-you-sell move, it looks like this:

Peak debt = existing loans on the security + purchase price + purchase costs − your cash contribution + finance costs added to the loan

For other bridges, replace “purchase price and costs” with whatever the bridge is paying for: the ATO debt, the equipment, the supplier, the deposit.

Purchase costs are easy to underestimate. Transfer (stamp) duty is a significant cost on a commercial purchase in every state, and each revenue office has its own rules, such as Revenue NSW’s transfer duty guidance. Add legal fees, searches, valuation and any adjustments at settlement.

What is end debt?

End debt is what you still owe after the exit:

End debt = peak debt − net exit proceeds

Net exit proceeds are what actually arrives: a sale price less agent’s commission, legal costs and adjustments; a refund less anything the ATO offsets against a debt; a claim payment less the excess. For a sale, your accountant may also point out tax on any capital gain, which the ATO explains in its guidance on selling commercial premises. Tax doesn’t come out of the settlement, but it does come out of your cash.

If end debt is zero or negative, the exit clears the bridge. If it’s positive, that’s your long-term borrowing, and it needs a home: usually an ordinary facility sized on what the business and remaining property can support.

How do lenders read these numbers?

Mostly as ratios.

• Peak debt ÷ security value. This works like a loan-to-value ratio across everything offered as security. It shows the cushion if values fall or the exit is late.
• End debt ÷ remaining security. After a sale, one property is gone, so end debt is measured against what’s left.
• Net exit ÷ new money. Shows whether the exit alone repays the new borrowing.

Our bridging timeline and peak-debt calculator works all three out and adds a timeline showing your gap and buffer. The headroom bands it shows are a general guide rather than any lender’s policy, but they make it easy to see when a plan is tight.

A worked example (illustrative)

Item	Amount
Existing loan on current premises	$550,000
New premises: price	$1,300,000
Stamp duty, legals and adjustments	$85,000
Cash contributed	−$200,000
Finance costs added to the loan (estimate)	$40,000
Peak debt	$1,775,000
Current premises: expected sale price	$1,050,000
Selling costs	−$30,000
Net exit proceeds	$1,020,000
End debt	$755,000

With both properties worth $2.35m together, peak debt is about 76% of security value: workable, but tight. End debt of $755k sits against the new $1.3m premises, about 58%. The numbers suggest looking at ways to reduce peak debt before committing. (Illustrative figures only.)

Want someone to run your real numbers with you? Start a short enquiry and a specialist will call.

Five ways to reduce peak debt

1. Contribute more cash, if the business can spare it without hurting working capital.
2. Offer additional security, such as another property with equity. It doesn’t reduce the debt, but it lowers the ratio.
3. Sell first, or sell sooner. A shorter gap means fewer finance costs and less exposure. Our guide on whether to sell first or buy first explores this.
4. Negotiate the purchase: price, settlement date, or a longer settlement that lines up with your sale.
5. Pay finance costs as you go instead of adding them to the loan, if cash flow allows. See how bridging costs are paid.

And three ways to make end debt manageable

1. Check serviceability early. Will the business support end debt at a normal lender’s assessment? If the exit is a refinance, start that conversation before you bridge.
2. Use a conservative sale price. End debt calculated at your walk-away price, not your hoped-for price, is the honest number.
3. Plan a second exit for the balance, such as trading surpluses, another sale or a future refund.

What if my end debt is higher than I expected?

It’s better to find out now than after settlement. A few options if the numbers look heavier than planned:

• Rework the purchase costs: negotiate price, settlement terms or inclusions.
• Plan a partial second exit, such as selling equipment or another asset after the move.
• Confirm serviceability with a long-term lender before committing, so you know end debt can be refinanced.
• Consider selling first if the business can tolerate the disruption.

End debt isn’t a problem in itself. Most businesses that buy premises carry a loan afterwards. It becomes a problem only when it hasn’t been planned for.

Get your load calculations checked

The numbers are only half of it. The other half is the evidence behind them and a structure that fits. Tell us your figures and a bridging specialist will talk them through with you. It takes about 60 seconds, there’s no credit check when you first enquire, and your details aren’t passed to a string of lenders.

Please enter the property values and loan balances accurately. Close-enough figures lead to close-enough answers; accurate ones lead to the right structure first time.

Have your peak and end debt checked →