Bridge Loan

• Also called swing loan or bridge financing.
  
  
• A bridge loan is a short term loan for borrowers who need money to close on a new home before they can sell their current home.
  
  
• A bridge loan enables you to borrow against the equity in your current home until it sells. Bridge loans are expected to be paid back within a short duration of time, usually within six months up to 1 year, and are expensive with high interest rates and fees.
  
  
• Interest accrues and is paid off with the bridge loan when you close the sale of your existing home. Usually a bridge loan is only needed for a few months until you sell your current home.





• Make sure you understand all involved in a bridge loan. Ask what the accrued interest will be as it can be very expensive. Terms and conditions can vary from lender to lender.
  
  
• Only your current home should be used as collateral.
  
  
• Interest payments on bridge loans are tax deductible.
  
  
• Make sure there are no prepayment penalties.
  
  
• Make sure you can extend the loan period if your house fails to sell before the loan comes due.

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