Bridge Loans
A Bridge Loan is a short-term financing solution that allows homeowners to buy a new property before selling their current home. It “bridges” the financial gap by giving temporary access to equity in your current property to fund the purchase of a new one.
What Is a Bridge Loan?
Bridge loans are temporary loans (usually 6–12 months, sometimes up to 18 months) secured by your current home. They allow buyers to make a non-contingent offer on a new home while giving them time to sell their existing property. Once the old home is sold, the proceeds are used to pay off the bridge loan.
How It Works
- Loan Term: Typically 6–12 months (short-term financing).
- Collateral: Usually secured by your current home, sometimes by both homes.
- Payments: May be interest-only until payoff.
- Interest Rates: Higher than conventional mortgages since the loan is short-term.
- Exit Strategy: Loan is paid off once the old property sells or refinanced into a permanent loan.
Benefits of Bridge Loans
- Allows you to buy before you sell without waiting.
- Makes your offer more competitive (non-contingent).
- Provides quick access to equity in your current home.
- Flexible repayment — often no payments required until the old home sells.
Fun Facts & Insider Details
- Common with Upgraders: Many homeowners use bridge loans when moving into larger or upgraded homes.
- Multiple Uses: Sometimes used by investors buying distressed homes while awaiting financing.
- Two Types:
- Closed Bridge: Buyer already has a contract to sell the current home.
- Open Bridge: Buyer hasn’t yet listed/sold the current home (higher risk).
- Higher Costs: Rates and fees are higher than traditional loans due to short terms and higher risk.
Who Is the Best Candidate?
- Homeowners who have equity in their current home.
- Buyers who found their dream home but haven’t sold their current one yet.
- Families relocating who need immediate housing.
- Borrowers with strong credit and a clear plan to sell.
FAQs – Bridge Loans
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Can I use a bridge loan for investment property?
Typically yes, though most bridge loans are designed for primary residences.
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What happens if my home doesn’t sell quickly?
You may need to refinance into a longer-term mortgage or extend the bridge loan (if available).
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Are payments required during the term?
Some lenders allow deferred or interest-only payments until the loan is paid off
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How fast can I close a bridge loan?
Often in 2–3 weeks, faster than traditional mortgages.
Next Step
Need flexibility to move before your home sells? A bridge loan might be the right solution.
- Call Us: 305-440-1507
- Email: info@torresnc.com
⚖️ Disclaimer: This information is for educational purposes only. Loan approval and program eligibility depend on credit, equity, and lender guidelines. Bridge loans are short-term products with higher costs than traditional financing.
