What is a Bridge Loan?

A bridge loan is a financing option that ‘bridges’ brief gaps in funding. These are loans – not grants – that families can use as they wait for other funds to become available for care. Bridge loan funds can be available in as little as 24 hours and are designed to be paid off quickly (such as when your home sells or other benefits kick in. Generally, bridge loans are utilized for 6-8 months until your ‘permanent’ source of funds becomes available.
Unlike traditional loans, a bridge loan is a bit like a credit card. You’re approved for a large amount based on your unique needs which you draw from each month to pay for care. This is helpful because interest is paid only on the funds used, not the entire credit line.

This type of loan is unique in that up to 6 family members can be co-applicants and share the cost of paying for care expenses. A poor credit score from any co-applicant can be offset by the others.

Bridge Loans Can Be Helpful for Families Who Are:

Transitioning a Loved One Into a Care Community

There are several expenses involved with moving into a care community, including entry fees, monthly fees and moving fees. Bridge loans can help cover these costs while you’re waiting for the home to sell or benefits to kick in.

Waiting for Veterans Benefits to Kick In

Due to a lengthy application and approval process, veterans benefits can take time to become available. A bridge loan can bridge the funding gap between application and approval.

Selling a Home

If families are selling the house through a traditional realtor, preparing the home for sale and finding the right buyer can take months.

As an Alternative to a Reverse Mortgage

A reverse mortgage is only an option when at least one homeowner continues to live in the home. It might make sense for homeowners who plan to use the proceeds for at least 5 years. A bridge loan, however, would make sense for shorter loan periods.

Keep in Mind

Bridge loans tend to have higher interest rates than other alternatives. Be sure to weigh your options with a financial planner or elder law attorney to make sure that a bridge loan makes sense for your situation.