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What is a Bridge Loan
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Bridge loans differ in cost from bank to bank. Some banks specialize in this type of financing and some banks do not deal with bridge loans at all. You probably want to give your personal bank a try first. If they fall short of your goals then ask your banker for a referral. The banking industry is very insestuous in regard to employment. |
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If you are in the middle of moving house, and you have found the ideal new home but you are unable to sell your present home for one reason or another, then consider a bridge loan to pay for any shortfall. You might also need a bridge loan when buying property at auction to pay for the property in the 28 day time frame. These loans are loads more deadly for banks, and as such, are loads more costly for the consumer. Only take on a bridge loan if you can pay it back within a six month time table.
Who can take on a bridge loan? Well, it depends on the bank. If you can qualify for a bridge loan, it is considered a special purpose loan. Only those with strong financials and a credit history reflecting a good repayment record will qualify. Alternately, you can possibly get a traditional mortgage as a second home. However, the interest rates for a second home are usually more expensive as well because they are a higher risk for the bank.
If you have the supporting documentation reflecting a sound financial position, and you need one, a bridge loan might just work for you.
Bridge loans differ in cost from bank to bank. Some banks specialize in this type of financing and some banks do not deal with bridge loans at all. You probably want to give your personal bank a try first. If they fall short of your goals then ask your banker for a referral. The banking industry is very insestuous in regard to employment. Employees move around from bank-to-bank during their careers and will likely have come across the question of bridge loans before and can point you in the direction of a good bridging loan company.
Are there any alternatives to bridge loans? Of course. If you have equity in your home, you might be able to close the gap with a second mortgage. We have already discussed a traditional mortgage. A note on the second-home mortgage; since you are likely not going to be keeping the new or old property, you can get a better short-term loan. Meaning, you may qualify for a 2 year low interest loan that will reset to a higher interest loan. When you consider that you will likely sell one of the homes before the 2 years are up, you will be able to refinance the home under traditional terms.
However, for very short-term loans, a bridge loan is probably your best bet.
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