It is hard for many homeowners to get the timing perfect when it come to buying and selling a home. Many homeowners tend to find a new home they want to purchase before they have sold the home they currently reside. So because of this lenders have established what is called a “bridge loan.”
These loans are very short term loans also referred to as “swing loans.” Its term is usually only about six months to one year and typically has a very high interest rate as well. This loan was only made to allow borrowers to carry their mortgage to a new property until they are able to secure a permanent mortgage.
These are perfect for homeowners looking to purchase and move into a new home, before they have either sold or paid off their current properties mortgage. With this type of financing the lender will allow the homeowner to borrow money against the value of their existing mortgage in order to secure the new property.
From lender to lender the terms and guidelines for these loans will slightly differ, as with most speciality loans. It is wise for the homeowner to make sure they fully understand the type of mortgage loan they are considering. If you are looking for the best deal on a mortgage bridge loan it will typically come from the lender who is currently holding your mortgage. They will now hold your bridge loan as well your current mortgage.
If you are unable to sell your home, but already found a home you like, a bridge loan may be perfect for you.