Bridge Loan

A bridge loan (or bridge financing) lets you close on a new home before your existing home sale closes. The lender advances the equity from your current property — minus the existing mortgage — so you can fund the deposit and downpayment on the new purchase. Bridge loans are typically 30 to 120 days, secured against both properties, and priced at prime + 2% to prime + 4%. They're available only when you have a firm sale agreement on the existing home with a closing date in the near future. Most A Lenders offer bridge financing as a short-term add-on to an approved purchase mortgage. You'll also pay legal fees on both properties and a small administrative fee for the bridge itself.