Residential Bridge Loan

Updated 5 months ago ​by Aneesah Emeka

In a nutshell: 
A short-term loan (also called a "swing loan" or "gap financing") taken out that's backed by the property a buyer currently owns. It "bridges the gap" between the time a home is sold and a new home is bought. These loans are typically for 6-12 months and come with ~2% higher interest rates than current fixed-rate mortgages.

Pros

  • It allows you to shop around and nail down your dream home before your current one gets sold.

Cons

  • Buyers are faced with a high interest rate and high closing costs.