Bridge loan lenders cover the gap when the home you are buying closes before the one you are selling. Mainstream bridge financing comes from the lender providing your new mortgage; when that is not available, private and alternative lenders offer bridge loans on different terms.
The bridge lenders listed here describe their own criteria. The single fact that decides which kind you need is whether the sale of your current home is firm.
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Banks and most prime lenders will offer bridge financing only alongside the new mortgage, and only once your existing home has a firm, unconditional sale. They are lending against a known sum arriving on a known date, and a conditional sale gives them neither.
That kind of bridge is short, simple and cheap relative to the alternatives. If it is available to you, it is almost always the right choice.
When the sale is not yet firm, or the new mortgage lender does not offer bridge financing, private lenders and MICs lend against the equity in the property you are selling. The loan is priced on that equity and on how quickly the property is likely to sell.
Expect a higher rate, a lender fee and a brokerage fee, all disclosed in writing before you sign. Ask for the total cost for the number of days you actually expect to need, and what happens if the sale takes longer.
The lender providing your new mortgage usually offers bridge financing once your current home has a firm sale. Where it does not, or the sale is not firm, private lenders and MICs offer bridge loans against your equity at a higher cost.
Not from most mainstream lenders. Private and alternative lenders will consider it, lending against your equity and pricing for the uncertainty of when the sale will close.
More than a mainstream bridge: a higher rate plus a lender fee and usually a brokerage fee, all disclosed in writing before you sign. On a short bridge the fees often outweigh the interest, so compare the total dollar cost for the days you need.
The bridge still has to be repaid, and you now carry two properties. A mainstream bridge may need to be refinanced into a private loan until the property sells. This risk is why lenders insist on a firm sale.
