Halo Capital

If you are not familiar with mortgage bridge loans, just picture it like a bridge to get you safely from one place to another. With a bridge mortgage, at one end of the bridge is your current house, and the other end is the house that you want to purchase. The loan spans the space between when you purchase the new house and until you sell the current house.

Bridge Loans To Get You To Your New Mortgage

Do you have plenty of equity in your current home, but not enough cash for the down payment on the second home until you sell the first? A mortgage bridge loan might be exactly what you need. Go ahead and make that offer on the new house, then get the down payment out of the equity in your current house with a bridge mortgage. There are basically two types of bridge mortgages:

  • In the first, you borrow the money needed to pay off the mortgage on your old home plus provide a down payment for your new one.
  • In the second, you keep your old mortgage and borrow against the equity you’ve built up in your old home. That equity is then used to provide a down payment for the new home.
  • You could also use a home equity line of credit (HELOC) on your existing home for the down payment according to about home, but most lenders won’t make a HELOC on a house that is for sale.

Mortgage Bridge Loans: Pros and Cons

Now you have a basic understanding of how a bridge mortgage loan works, let’s look at a few of the pros:

  • It is short-term financing, usually 6-12 months.
  • Bridge mortgages are often interest-only payments.
  • It makes the purchase of your new home possible even though your existing home has not sold.

And some of the cons of getting a bridge loan for mortgage:

  • Because this is a short-term loan, mortgage bridge loan rates and fees are likely to be higher.
  • Permanent financing is not guaranteed.
  • Some lenders, when you are getting your permanent financing, calculate into your debt to income ratio a payment amount to pay the loan off.

Is a Bridge Loan Right For You?

If you feel a bridge loan is right for you, the first thing that you need to do is check out mortgage bridge loan rates. Then you will need the following information:

  • Purchase Price of the new property
  • How much cash do you have available to put towards down payment?
  • What is the principal amount owed on your mortgage on your current property?
  • What is the interest rate of your current mortgage?
  • Number of months of first mortgage
  • Bridge interest rate
  • Anticipated term of bridge

There is a bridge loan mortgage calculator at PineGrove.com. Armed with the figures listed above and your bridge loan mortgage calculator, you are able to knowledgeably discuss with your lender if a bridge loan is right for you.

Advantages of Bridge Loans