In most cases, when a homeowner is planning to move, they must rely on the money they are getting from the sale of their current home in order to purchase the new one. However, closing dates don’t always work out right and you find yourself in a difficult balancing act with your finances.

This is where bridge loans come in handy- you can purchase your new home without having to wait for your current home to sell. Unfortunately, there are some drawbacks to this type of loan that “bridges” the gap. In this article, we’ll look at how they work and he advantages versus disadvantages of this type of financing.

What are Bridge Loans?

This is a short-term loan used in real estate transactions when a buyer doesn’t have the money they need to purchase a new property before the first property sells. Typically, you can borrow up to 80% of the combined value of the first and second property. Of course, different lenders have their own standards.

Advantages vs. Disadvantages of Bridge Loans

As with other loan products, these loans have advantages and disadvantages for the borrower. It’s necessary to consider all of these before making your decision.


Faster financing
Flexibility in purchasing
No contingencies in your offer
Less hassle


More expensive
Higher interest rates
High 0rigination fees
Equity required
Sound finances
Responsibility for the loan even if first property doesn’t sell

While bridge loans may seem like an attractive option when you’ve found a home that you want to purchase but your current home hasn’t sold, you must consider the advantages and disadvantages very carefully. There are some other options that you might want to consider instead. Call Bold Growth Solutions for help in deciding if a bridge loan is the best route for you to take or if another option is right for you.