Bridge Loans

Bridge Loans


Ok, home sellers. If you are considering buying a new home prior to selling your current home then you should know about bridge loans.


What is a bridge loan?

A bridge loan offers you the opportunity to finance your new home before selling your current home.


Bridge loans traditionally require the following:

  • 20% equity in the home you are selling
  • 6-12 month term


It is usually best to obtain a bridge loan in a housing market like Marin County where homes sell quickly. 


Pros of a bridge loan:

  • Payments may be interest-only or deferred at least until you sell your current home.
  • You can make an offer on your new house without a sale contingency, increasing the likelihood of your purchase offer being accepted. 
  • You can move out of your old home and make updates, enhancements, and stage prior to the home hitting the market to further increase its value. 
  • You do not need to live in the home you are selling while it is on the market, which is a huge plus considering the pandemic. 


Cons of a bridge loan:

  • You may own two homes with two separate mortgages until you sell your existing home.
  • Traditionally, you are limited to 80% Loan to Value, which requires more than 20% equity to yield enough money for your new house. 
  • You may need to pay for an appraisal and any associated closing costs/fees. 
  • A bridge loan borrower will usually pay high-interest rates and APR.


When to use a bridge loan:

  • If sellers in your area won’t accept contingent offers due to the competitive market. 
  • You are not in a position to afford the down payment on your next home without selling your current home. 
  • You are confident you’re home will sell but prefer to secure a new home prior to listing it. 


If you have any additional questions about bridge loans, the current real estate market, or would like to speak with one of my preferred lenders, reach out, and let’s get the process started. 


 📲(415) 259-8088








Torben Yjord-Jackson – Realtor

EXP Realty of CA, Inc.

License # 02050831

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