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Closing the Time Gap: Mortgage Bridge Loan

Adam Smith

Let’s face it. Finances can get really tight sometimes. It doesn’t matter if you are an thriving individual or a growing business. At some time or another, we will all run into the same sort of problem. Our savings will be low, our cash flow dwindling, and we will still be in need of making a financial move that can’t wait.

Mortgage Bridge Loans to the Rescue

For instance, an individual might be ready to move to a bigger house, but is confronted by the finance problem. How do you space the gap between paying off your current mortgage, coming up with a down payment for the new house, and securing the mortgage on that house as well? Obviously, you must take advantage of some financial instrument to help you transition from the old mortgage to the new mortgage. A mortgage bridge loan provides the answer to your problem.

Many businesses face a similar problem. They are in desperate need of temporary or short term financing so they can sell their commercial properties or transition smoothly into a refinancing solution. Again, their problem is one of time. They need a quick, yet short term answer to their financial concerns, and a mortgage bridge loan provides just that.

Its like Crossing a River

Have you ever had to cross a bridge to get from point A to point B? Normally, a bridge is erected to help us get through the terrain we might not otherwise be able to navigate by ourselves. Most of us can’t drive across rivers, bays, or lakes. We need assistance to do so, and a physical bridge allows us to reach our destination. A mortgage bridge loan works in much the same way. In this case however, the bridge that is built serves as a financial bridge, allowing us the flexibility we need to get from one point in time to another point in time. In this sense then, a financial bridge spaces time, not water.

Now that we have a better understanding of what a mortgage bridge loan is, let’s examine a couple of scenarios where a mortgage bridge loan might prove beneficial.

Personal Mortgage Bridge Loan Scenario

Suppose you are buying a new house and to move into your new house you must first sell your old house. Essentially, to make the move you must perform two separate transactions. First, you must sell your current home. Second, you must close on your new home. Ideally, you can complete these two transactions smoothly with little or no problems. However, unless you have a respectable amount of savings or a high positive cash flow, you will likely need some extra cash to put down on your new home as you wait to close on your old home.

In such a scenario, a mortgage bridge loan helps you cover this shortage of cash. Typically, a personal mortgage bridge loan is structured in one of two ways. It can either be used to pay off the old mortgage and sign for the new mortgage, or it can might be used to combine the old and the new debt into a single mortgage. Either way it eliminates the cash flow issue and allows you to move into your new home.

Business Mortgage Bridge Loan Scenario

Businesses constantly require financial assistance as well. Suppose your business is looking to acquire some commercial properties, such as retail developments or business parks. Your commitment to theses properties is only temporary, thus you are not interested in a long term business mortgage loan. Rather, your interest in these properties is as a short term investment and so you are in the market for short term lending. A mortgage bridge loan will then allow your business to acquire financing for a relatively short period of time, say 1 – 3 years, and you are free to sell the property when an acceptable bid is offered.

Conclusion

Mortgage bridge loans can assist almost any kind of customer, whether they are individual or a business. As a financial tool, these loans help bridge the gap of time created by other financial instruments. Each instrument or tool has its place in the financial realm, and it is up to us to understand them and use them appropriately.

About the author:
Adam Smith is a client account specialist with – More Visitors. More Buyers. More Revenue. For more information about a mortgage bridge loan, please visit

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