Bridge Loan: What Does It Mean?

A bridge loan is a short-term loan that helps homeowners finance the purchase of a new home before they've sold their current one. It essentially bridges the gap between two transactions, giving you access to the equity in your existing home to cover a down payment or other costs on the new property. Bridge loans typically have higher interest rates than traditional mortgages and are designed to be repaid quickly, usually within six to twelve months. They can reduce the stress of having to time a home sale perfectly, but they also carry risk if your current home takes longer to sell than expected. Bridge loans are most common in competitive real estate markets where buyers need to move quickly.