Mortgage Bridge Loan Explained
A Bridge Loan is a second position mortgage on your outbound (former) primary residence. It is designed to extract equity from the departure residence to be used as a down-payment on the destination (future) primary residence.
How do I get a Bridge Loan?
In an ideal world you will never need one, or really want a Bridge Loan. It means that the project you are trying to accomplish is reactionary and not being proactively led.
Before circuit breakers were invented, a carefully placed penny could be used to circumvent the need for a fresh fuse if one was not available. The danger being that the circuit now could cause a fire if overloaded but allowed your electricity to temporarily function to power your appliances.
There are several natural circuit breakers in the home sale/buy process. For instance, if you can’t sell your home then the lack of sale will prevent you from going on to the next purchase. There are more reasons potentially causing a “non-saleable scenario” than I have space to list in this article. But please beware we see it often – and usually out of your (the sellers) control.
A Bridge Mortgage functions as the penny and allows you get into the new home while still carrying the old one.
At a minimum you will be handling and accruing interest on three mortgages, one of them with a balloon/demand feature. Tick tock...
If you come into the need for a Bridge Loan, you should talk with us. We have provided guidance and consider ourselves experts in explaining the pros and cons of Bridge financing, as well several alternative solutions in lieu of the penny in the fuse panel.
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